WSJ and CNBC: Fed stimulus could be up to $100 billion a month - $1 trillion

[Slimprofits]

http://online.wsj.com/article/SB1000...LEFTTopStories

By JON HILSENRATH And JONATHAN CHENG

The Federal Reserve is close to embarking on another round of monetary stimulus next week, against the backdrop of a weak economy and low inflation—and despite doubts about the wisdom and efficacy of the policy among economists and some of the Fed's own decision makers.

The central bank is likely to unveil a program of U.S. Treasury bond purchases worth a few hundred billion dollars over several months, a measured approach in contrast to purchases of nearly $2 trillion it unveiled during the financial crisis. The announcement is expected to be made at the conclusion of a two-day meeting of its policy-making committee next Wednesday.

[..]

A Wall Street Journal survey of private sector economists in early October found that the Fed is expected to purchase about $250 billion of Treasury bonds per quarter and continue until mid-2011, amounting to about $750 billion in all.

New York Fed president William Dudley put forward one key benchmark in a speech earlier this month. He noted that $500 billion worth of purchases had the same impact on the economy as a reduction of the federal funds rate by one-half to three-quarters of a percentage point.

In speeches this week, Mr. Dudley repeated he found the economy's weak state "unacceptable" and said "further Fed action was likely to be warranted."

The bond-buying program is likely to focus on Treasury bonds with maturities mostly between 2-years and 10-years, according to interviews with some officials. The Fed could buy even longer-term bonds, though some officials are reluctant to do that aggressively because it could expose them to long-term losses without much added benefit.

******

Now on CNBC this morning, they are saying it could be $100 billion a month...I will post the video if they do.



fast forward to the 6 minute mark if you're in a rush

direct link if the embed didn't work (it looks funny in my browser window) - http://www.cnbc.com/id/15840232?video=1626190333&play=1

[bill]

Re: WSJ and CNBC: Fed stimulus could be up to $100 billion a month - $1 trillion

I think this is one of the most important FED meetings we will experience for some time as it will be marked as the beginning of a longer term agenda. Interest rate talk is over and a long term QE program will begin.
FEDs language will indicate QE 2-? future accommodations will be a given, thus setting a new guaranteed QE continuing trend. FEDs financial dependence will deepen as economy is in need of financial support or should I say “financial stability“.

FEDs Nov. QE decision will be less than expected based on current market expectations and be construed by wall street as to little. However QE 2-? nonstop future guarantee language by the FED will offset “to little“.
This FED meeting will represent the beginning of a long (2-3-5yrs?) strategy of accommodations and asset purchasing by the FED. Don’t expect a one time big bang from the FED, but more of a long term FED financial support plan to be introduced.

FSOC is now up and running ready to go.
FED now has guaranteed powers granted from Dodd-Frank bill and will not hesitate using new tools and that means expanding not contracting balance sheet.

FED will continue accumulating assets knowing it has control powers. FED has a license to print, secure and to liquidate.
bill

I was going to post this on 10-19-10 but had no access to below link.
http://www.itulip.com/forums/showthr...758#post177758

[don]

Re: WSJ and CNBC: Fed stimulus could be up to $100 billion a month - $1 trillion

I think this is one of the most important FED meetings we will experience for some time as it will be marked as the beginning of a longer term agenda. Interest rate talk is over and a long term QE program will begin.

FEDs language will indicate QE 2-? future accommodations will be a given, thus setting a new guaranteed QE continuing trend. FEDs financial dependence will deepen as economy is in need of financial support or should I say “financial stability“.

FEDs Nov. QE decision will be less than expected based on current market expectations and be construed by wall street as to little. However QE 2-? nonstop future guarantee language by the FED will offset “to little“.

This FED meeting will represent the beginning of a long (2-3-5yrs?) strategy of accommodations and asset purchasing by the FED. Don’t expect a one time big bang from the FED, but more of a long term FED financial support plan to be introduced.

FSOC is now up and running ready to go.

FED now has guaranteed powers granted from Dodd-Frank bill and will not hesitate using new tools and that means expanding not contracting balance sheet.

FED will continue accumulating assets knowing it has control powers. FED has a license to print, secure and to liquidate.

Is this the perfect marriage of socializing the losses, monetizing the debt, and insuring the privatizing of any and all low-hanging fruit?

[Starving Steve]

Re: WSJ and CNBC: Fed stimulus could be up to $100 billion a month - $1 trillion

If credit is cut-off, the velocity of a HUGE money supply goes to ZERO. Therefore, the money supply in circulation is ZERO.

Starving Steve's math for morons: (HUGE MONEY-SUPPLY INCREASE) x ( 0 ) = 0.

In simple language: When money is printed, release to Fed-member banks, and the money is then re-deposited at the Fed, the fresh money ( newly printed money ) sits on a shelf and does not enter circulation. EXCELLENT!!!!!!!!!!!!!!!!!!!!!!!

Try to create inflation when there is ZERO new money in circulation! And the proof of this is that without credit, asset prices in the U.S. de-flate. Try to spend money when you have no credit and your home is DE-flating.

This is why it is soooooooooooooo darn important to spell English with hyphens. Thus: de-flation is not in-flation. De-flation is when prices drop, and your cost-of-living becomes lower. YOU CAN LIVE. YOU CAN SURVIVE. With in-flation, you can not survive........... Get it?

So if we all lose money with our homes, then rents have to drop. Then land prices drop. Then food prices drop.
Chop government waste such as the entire EPA and the entire Department of Education, not to mention much of the Defence Department in Washington, and the de-flation builds. Chop incomes, especially incomes of labour-aristocrats in government, and the de-flation increases. Chop the spending for the American gulag that is now 2,200,000 inmates, and the de-flation increases. Chop the federal grants to Silicon Valley companies for solar energy nonsense such as solar-energy paint, and the de-flation increases. Win the war against the Taliban and against Al Qaide by launching more drones, and the de-flation increases further. Chop the cancer of for-profit private healthcare out of America, and the de-flation increases.

Whatever this so-called "new economy" is, I like it. The grand re-setting is a DE-flation.

Kids: Tell your school teachers how to spell with hyphens. And walk-out of standardized and timed-testing, because it is an insult to intelligence. Learn Spanish or Chinese or French, or whatever language, and walk-out of your public schools in the U.S. Demand a meaningful school curriculum, not the nationalistic crap that they are teaching in U.S. public-schools now.

[herbkarajan]

Re: WSJ and CNBC: Fed stimulus could be up to $100 billion a month - $1 trillion

I

FED will continue accumulating assets knowing it has control powers. FED has a license to print, secure and to liquidate.
bill

don't fall into this trap, QE is a ruse, the powers that be have another agenda- austerity, the transmission mechanism to enforce it is higher rates. The 'like minded' politicians are already sweeping into office. The rest of the 'developed' world is falling in line, first eastern europe, then Ireland, now Britain and France. U.S is next.

[ThePythonicCow]

Re: WSJ and CNBC: Fed stimulus could be up to $100 billion a month - $1 trillion

don't fall into this trap, QE is a ruse, ...

I agree with your post, except that I would not call QE simply a ruse, but rather a deceptive explanation for something that has been proceeding at a rapid pace for two years now.

Quantitative Easing (QE):

• provides life support to many banks,
• provides more profits and toxic debt cleansing to a few chosen banks (at least including JPMorgan),
• piles up awesome amounts of U.S. Treasury debt,
• piles up promises for yet more Treasury debt with the GSE's and FDIC, and
• continues to entangle foreign central and major banks in Dollars, Treasuries, and the Anglo-American Financial Empire.

If I were Ben Bernanke, I suppose I would consider QE a grand success, and seek to continue it.

Yes - austerity is planned for the rest of us mere mortals.

[touchring]

Re: WSJ and CNBC: Fed stimulus could be up to $100 billion a month - $1 trillion

Try to create inflation when there is ZERO new money in circulation! And the proof of this is that without credit, asset prices in the U.S. de-flate. Try to spend money when you have no credit and your home is DE-flating.

This is why it is soooooooooooooo darn important to spell English with hyphens. Thus: de-flation is not in-flation. De-flation is when prices drop, and your cost-of-living becomes lower. YOU CAN LIVE. YOU CAN SURVIVE. With in-flation, you can not survive........... Get it?

So if we all lose money with our homes, then rents have to drop. Then land prices drop. Then food prices drop.
Chop government waste such as the entire EPA and the entire Department of Education, not to mention much of the Defence Department in Washington, and the de-flation builds. Chop incomes, especially incomes of labour-aristocrats in government, and the de-flation increases. Chop the spending for the American gulag that is now 2,200,000 inmates, and the de-flation increases. Chop the federal grants to Silicon Valley companies for solar energy nonsense such as solar-energy paint, and the de-flation increases. Win the war against the Taliban and against Al Qaide by launching more drones, and the de-flation increases further. Chop the cancer of for-profit private healthcare out of America, and the de-flation increases.

Whatever this so-called "new economy" is, I like it. The grand re-setting is a DE-flation.

Kids: Tell your school teachers how to spell with hyphens. And walk-out of standardized and timed-testing, because it is an insult to intelligence. Learn Spanish or Chinese or French, or whatever language, and walk-out of your public schools in the U.S. Demand a meaningful school curriculum, not the nationalistic crap that they are teaching in U.S. public-schools now.

How do you have recovery when you're losing jobs all the time?

http://www.nasdaq.com/newscontent/20...ryid=800161063

http://www.foxbusiness.com/markets/2...inese-factory/


Ok, some say America no longer manufactures and Americans are barbers, plumbers, bankers and real estate brokers. But how do you do finance and investments when the perception of the currency is:

[Spartacus]

Re: WSJ and CNBC: Fed stimulus could be up to $100 billion a month - $1 trillion

So in terms of central bank actions, government actions and public sentiment is this Japan 1993 or USA 1935?

(using charts as a vague, coarse proxy of some kind, not meant as any kind of accurate reading or comparison)

http://ablog.typepad.com/keytrendsin...prices-be.html
http://theinflationist.com/great-dep...-market-charts

the comparison breaks down completely with the S&P though, which seemingly responded to the stimuli very, very well
http://www.stockmarkettiming.com/nikkei-comparison.html

http://online.wsj.com/article/SB1000...LEFTTopStories

[bill]

Re: WSJ and CNBC: Fed stimulus could be up to $100 billion a month - $1 trillion

I think this is one of the most important FED meetings we will experience for some time as it will be marked as the beginning of a longer term agenda. Interest rate talk is over and a long term QE program will begin.
FEDs language will indicate QE 2-? future accommodations will be a given, thus setting a new guaranteed QE continuing trend. FEDs financial dependence will deepen as economy is in need of financial support or should I say “financial stability“.

FEDs Nov. QE decision will be less than expected based on current market expectations and be construed by wall street as to little. However QE 2-? nonstop future guarantee language by the FED will offset “to little“.
This FED meeting will represent the beginning of a long (2-3-5yrs?) strategy of accommodations and asset purchasing by the FED. Don’t expect a one time big bang from the FED, but more of a long term FED financial support plan to be introduced.

FSOC is now up and running ready to go.
FED now has guaranteed powers granted from Dodd-Frank bill and will not hesitate using new tools and that means expanding not contracting balance sheet.

FED will continue accumulating assets knowing it has control powers. FED has a license to print, secure and to liquidate.
bill

I was going to post this on 10-19-10 but had no access to below link.
http://www.itulip.com/forums/showthr...758#post177758

That’s right Mr. El-Erian, QE 3,4,5,6,7.…….
Devaluing dollars as inflation pressures build and paper runs for resources.

http://www.ft.com/cms/s/0/af370888-e...tml?ftcamp=rss

By Mohamed El-Erian
November 3 2010 20:12
Other government agencies are paralysed by real and perceived constraints, seemingly happy to retreat to the sidelines and let the Fed do all the heavy lifting. But liquidity injections and financial engineering are insufficient to deal with the challenges that the US faces. Without meaningful structural reforms, part of the Fed’s liquidity injection will leak right out of the US and result in yet another surge of capital flows to other countries.
The rest of the world does not need this extra liquidity, and this is where the second problem emerges. Several emerging economies, such as Brazil and China, are already close to overheating; and the eurozone and Japan can ill afford further appreciation in their currencies.
Despite polite rhetoric to the contrary in the lead up to the Group of 20 leading economies summit in Korea this month, other countries are likely to counter what they view as an unnecessarily disruptive surge in capital flows caused by inappropriate and short-sighted American policy. The result will be renewed currency tensions and a higher risk of capital controls and trade protectionism.
The third issue relates to the gradual erosion of America’s central role in the global economy – including as the provider of both the world’s reserve currency and its deepest and most predictable financial markets. No other country or multilateral institution can displace the US, but a combination of alternatives can serve to erode its influence over time. No wonder commodity prices surged higher and the dollar weakened markedly in anticipation of QE2, pointing to increased input costs for American companies and unwelcome pressures on their earnings.
The unfortunate conclusion is that QE2 will be of limited success in sustaining high growth and job creation in the US, and will complicate life for many other countries. With domestic outcomes again falling short of policy expectations, it is just a matter of time until the Fed will be expected to do even more. And this means Wednesday’s QE2 announcement is unlikely to be the end of unusual Fed policy activism.
The Fed would be well advised to prepare for this possibility from now. In doing so, it should insist that any further use of its balance sheet be subject to two overriding conditions.
First, rather than constitute yet another solo effort, the use of the Fed’s balance sheet should be one component of a more holistic US policy approach that addresses both demand and structural reform issues; and second, that such a policy response be accompanied by correlated, if not co-ordinated, actions in other countries. Without that, the Fed risks finding itself crossing the delicate line that separates a courageous policy approach from a counterproductive one.

http://www.federalreserve.gov/newsev.../20101103a.htm

The Committee will regularly review the pace of its securities purchases and the overall size of the asset-purchase program in light of incoming information and will adjust the program as needed to best foster maximum employment and price stability.

http://www.newyorkfed.org/markets/op...cy_101103.html

Taken together, the Desk anticipates conducting $850 billion to $900 billion of purchases of longer-term Treasury securities through the end of the second quarter. This would result in an average purchase pace of roughly $110 billion per month, representing about $75 billion per month associated with additional purchases and roughly $35 billion per month associated with reinvestment purchases.

[herbkarajan]

Re: WSJ and CNBC: Fed stimulus could be up to $100 billion a month - $1 trillion

I agree with your post, except that I would not call QE simply a ruse, but rather a deceptive explanation for something that has been proceeding at a rapid pace for two years now.

worse, it's a trap door and lemmings are falling right in

let me get this straight, the FED will NOT have enough debt to buy. They are talking to the Treasury about increasing issuance. The stories are how it's going to drive the rates down to zero.. Are you kidding me. QE is either a last ditch attempt to stay off a run on the dollar or worse, a cynical ploy to take out a large important 'customer' at par, before it all falls apart.

There's no bid under the Treasuries, when the sentiment turns there's nothing the FED can do

[herbkarajan]

Re: WSJ and CNBC: Fed stimulus could be up to $100 billion a month - $1 trillion

>>So in terms of central bank actions, government actions and public sentiment is this Japan 1993 or USA 1935?

it's Britain as of September, 1931

"
On the evening of October 6, 1931 Hoover met with 32 Congressional leaders of both parties at the White House. Hoover summarized the world economic situation in the wake of the British default:

• "The British... are suffering deeply from the shocks of the financial collapse on the Continent. Their abandonment of the gold standard and of payment of their external obligations has struck a blow at the foundations of the world economy. The procession of countries which followed Britain off the gold standard has left the United States and France as the only major countries still holding to it without modification. The instability of currencies, the now almost world-wide restrictions on exchange, the rationing of imports to protect these currencies and the default of bad debts, have cut deeper and deeper into world trade."
  
  
  "