Qe 3??

[Trajan]

in the immortal words of Palmer-

you gotta be fucking kidding......
[ame=http://www.youtube.com/watch?v=-nVRDksE29c&feature=related]YouTube - The Thing transforms Norris[/ame]


Goldman Fires The Second Shot Across The QE3 Bow: "Successful Fiscal Consolidation Needs Monetary Policy Help"


Yesterday, when we presented the Bloomberg interview of Princeton economist and former Fed vice chairman Alan Blinder, we speculated that his statement that "more easing is necessary" was the first shot across the QE3 bow. Today, Goldman's Sven Jari Stehn has fired the second one in a paper just released titled: "Fiscal Adjustment without Fed Easing: A Tall Order" in which he basically takes our conclusion from the Blinder interview to the next level. As Blinder said previously, in order to improve the once again deteriorating labor picture, more fiscal stimulus would be necessary. That, however, is impossible, especially in a Congress where everyone is now promising $4 trillion of deficit cuts over the next few years. The only difference is how this cutting will be achieved: republicans want spending cuts, while democrats are demanding tax hikes for the richest. While neither approach will work in the US without the shock of a bond-crash induced austerity, Goldman conducts an thought experiment in which it evaluates the effectiveness of a tax-based and a spending-based fiscal consolidation. While finding that on average spending based deficit reduction is more effective, it only truly works in parallel with assistance from monetary policy: be it an interest rate decrease (impossible due to ZIRP) or further Large Scale Asset Purchase (QE) program. In other words, the only thing that can prevent an economic contraction in the next 2 years of semi-austerity, will be more monetary easing.

way more at-

Goldman Fires The Second Shot Across The QE3 Bow: "Successful Fiscal Consolidation Needs Monetary Policy Help" | zero hedge



you know, I am speechless, really and that aint easy.....

 

[Oddball]

Wiemar Republic, anyone?

 

[Norman]

Semi-austerity = Only 1 trillion dollar deficits a year (which are funded largely by the fed)?

Wow. Semi-austerity. Almost like real austerity Thank goodness that after couple years of this semi austerity US can return to it's normal spending habits of 20% of GDP deficit spending a year.

I doubt they will call it the QE3 or anything. The FED will keep buying in silence and pretend that it has "strong dollar policy".

 

[Mad Scientist]

Semi-austerity = Only 1 trillion dollar deficits a year (which are funded largely by the fed)?

Wow. Semi-austerity. Almost like real austerity Thank goodness that after couple years of this semi austerity US can return to it's normal spending habits of 20% of GDP deficit spending a year.

I doubt they will call it the QE3 or anything. The FED will keep buying in silence and pretend that it has "strong dollar policy".

No no no, these people in government are very smart and well educated. They wear $5,000 suits, they must be right.

 

[Mr Liberty]

This is so stupid. I know they are going to do this, it is how they think. The result will be the same as the Wiemar republic, Yugoslavia and Zimbabwe. Hmm. I wonder whose face will be on the one trillion dollar bill.

We have to trade with people. That means giving something of value for something of value. We cannot continue to give a fiat currency that we debase every day. This should be common sense.

Those who believe in Keynesian economics are like people in a cult, denying the reality that is obvious to all outside the cult. They think they have fixed everything with their stimulus spending, not realizing that they have only made the situation worse. They just close their eyes and sip their cool-aid with cyanide.

They should have followed the successful policy of 1920. There was a depression in 1920, that was worse than 1929. It was cause by the wartime economy changing to a peacetime economy. The government response was to cut the federal budget in half.

The federal budget has been too big for over 40 years. This experiment in socialism is a complete failure. Still the socialist, in both parties, hold on to their failed programs with both hands, trying to convince everyone that things would be much worse with out them. Indeed, the socialist will blame their failures on capitalism and the rich. I am certain of it.

This is not just the end of the age of America, it is the end of America period. The country that emerges, from this financial disaster, will be either a highly centralized socialist dictatorship like the USSR or break up into separate countries.

 

[Wiseacre]

I wouldn't be at all surprised to see a QE3, not that it'll fix anything. What else is there the Fed can do but print more money? Other than let the economy crash and burn and then pick up the pieces. Can't do that though, Obama wouldn't get re-elected.

 

[Big Fitz]

Wiemar Republic, anyone?

If we're lucky. Right now the best case scenario we're facing is 1970's stagflation. And I won't take those odds.

If we're unlucky, Confederate States of America.

If we're well and truly fooked, Revolutionary France

 

[Big Fitz]

This is so stupid. I know they are going to do this, it is how they think. The result will be the same as the Wiemar republic, Yugoslavia and Zimbabwe. Hmm. I wonder whose face will be on the one trillion dollar bill.

We have to trade with people. That means giving something of value for something of value. We cannot continue to give a fiat currency that we debase every day. This should be common sense.

Those who believe in Keynesian economics are like people in a cult, denying the reality that is obvious to all outside the cult. They think they have fixed everything with their stimulus spending, not realizing that they have only made the situation worse. They just close their eyes and sip their cool-aid with cyanide.

They should have followed the successful policy of 1920. There was a depression in 1920, that was worse than 1929. It was cause by the wartime economy changing to a peacetime economy. The government response was to cut the federal budget in half.

The federal budget has been too big for over 40 years. This experiment in socialism is a complete failure. Still the socialist, in both parties, hold on to their failed programs with both hands, trying to convince everyone that things would be much worse with out them. Indeed, the socialist will blame their failures on capitalism and the rich. I am certain of it.

This is not just the end of the age of America, it is the end of America period. The country that emerges, from this financial disaster, will be either a highly centralized socialist dictatorship like the USSR or break up into separate countries.

Can we say "Currency Reset" boys and girls?

And if we listen to the conspiracy nuts, they're already talking "Amero"

 

[Trajan]

This is so stupid. I know they are going to do this, it is how they think. The result will be the same as the Wiemar republic, Yugoslavia and Zimbabwe. Hmm. I wonder whose face will be on the one trillion dollar bill.

We have to trade with people. That means giving something of value for something of value. We cannot continue to give a fiat currency that we debase every day. This should be common sense.

Those who believe in Keynesian economics are like people in a cult, denying the reality that is obvious to all outside the cult. They think they have fixed everything with their stimulus spending, not realizing that they have only made the situation worse. They just close their eyes and sip their cool-aid with cyanide.

They should have followed the successful policy of 1920. There was a depression in 1920, that was worse than 1929. It was cause by the wartime economy changing to a peacetime economy. The government response was to cut the federal budget in half.

The federal budget has been too big for over 40 years. This experiment in socialism is a complete failure. Still the socialist, in both parties, hold on to their failed programs with both hands, trying to convince everyone that things would be much worse with out them. Indeed, the socialist will blame their failures on capitalism and the rich. I am certain of it.

This is not just the end of the age of America, it is the end of America period. The country that emerges, from this financial disaster, will be either a highly centralized socialist dictatorship like the USSR or break up into separate countries.

Can we say "Currency Reset" boys and girls?

And if we listen to the conspiracy nuts, they're already talking "Amero"

I prefer "Duan"....

 

[william the wie]

Obama never learned the Carter lessons:

Ford almost won in 76 despite his wildly unpopular pardoning of Nixon because he tried to fight inflation.

Carter lost in 1980 despite a divided opposition of Anderson as a mainstream Republican, Reagan as a firebrand and Clarke for the LP because he failed to fight inflation.

Inflation only benefits limosine liberals on Wall St. and in CA. Sure they are the cash base and therefore the main constituency of the Democrats but the Ds in DC keep forgetting that they aren't a whole lot of voters.

 

[Wiseacre]

Inflation only benefits the party not in power. Everybody else gets fucked. No kiss or vaseline either.

 

[sparky]

 

[Trajan]

 

[Baruch Menachem]

They would have to get congressional approval. The voters hated both of the previous events, and those responsible were voted out in large number both in 08 and 10.

for for QE again would be like doing a high wire act on a high tension power line

 

[Big Fitz]

They would have to get congressional approval. The voters hated both of the previous events, and those responsible were voted out in large number both in 08 and 10.

for for QE again would be like doing a high wire act on a high tension power line

yes, and so many are dumb enough to do it, still. At least in the Senate. The house, not so much anymore as many of those officials are now just citizens.

 

[Toro]

I think the Fed is more likely to start raising rates than institute another round of QE3. I believe that things would have to get materially worse before there is another round of quantitative easing.

 

[Trajan]

I think the Fed is more likely to start raising rates than institute another round of QE3. I believe that things would have to get materially worse before there is another round of quantitative easing.

well the eu has and are considering doing it again.....how worse do you think things would need to be or get, or that is, how much more of stumbling thru a mangled recovery would it take in your opinion?

 

[Big Fitz]

I think the Fed is more likely to start raising rates than institute another round of QE3. I believe that things would have to get materially worse before there is another round of quantitative easing.

I hate to say it, but if I had a choice of raise taxes or QE3, at this point... I'd very angrilly and reluctantly accept a TEMPORARY raise in taxes.

Technically you're fooked either way.

And you can bet I'd vote the asshole who forced me into such a situation out.

 

[Trajan]

I think the Fed is more likely to start raising rates than institute another round of QE3. I believe that things would have to get materially worse before there is another round of quantitative easing.

I hate to say it, but if I had a choice of raise taxes or QE3, at this point... I'd very angrilly and reluctantly accept a TEMPORARY raise in taxes.

Technically you're fooked either way.

And you can bet I'd vote the asshole who forced me into such a situation out.

I'd have to agree....but....I don't trust them to use the tax revenue even if we squeezed out more in this economy, which I doubt, to do the right thing.

 

[Big Fitz]

I think the Fed is more likely to start raising rates than institute another round of QE3. I believe that things would have to get materially worse before there is another round of quantitative easing.

I hate to say it, but if I had a choice of raise taxes or QE3, at this point... I'd very angrilly and reluctantly accept a TEMPORARY raise in taxes.

Technically you're fooked either way.

And you can bet I'd vote the asshole who forced me into such a situation out.

I'd have to agree....but....I don't trust them to use the tax revenue even if we squeezed out more in this economy, which I doubt, to do the right thing.

Absolutely.