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What will happen when QE2 ends?

nottyboi

Well-known member
May 14, 2008
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About 200B more in QE2.. to go...most observers are saying there will be no QE3 as the US economy is no longer in an "emergency state". So what happens when the 100B/month of cash infusions stop? Will the 20 year implode? Will the US$ spike? Will gold plunge? Will the SP crash...or nothing? Opinions?
 
B

burt-oh-my!

I hope to hell all these stimulus measures come to a quick end. Basically amounts to digging holes in the ground and filling them in again. Japan has tried that for 20 years without success. It does nothing for long-term growth or productivity.

Spending ........Not equal to ........economic growth in the long term.. You have to produce first, then spend. Says law.

The easiest way to deal with all the nincompoops who feel that we have to spend our way to prosperity is to think of yourself marooned on a deserted island with a group of people. I assure you , y'all could try and spend and 'demand' all you wanted, but until someone actually produced something, nothing would happen.
 

hinz

New member
Nov 27, 2006
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About 200B more in QE2.. to go...most observers are saying there will be no QE3 as the US economy is no longer in an "emergency state". So what happens when the 100B/month of cash infusions stop? Will the 20 year implode? Will the US$ spike? Will gold plunge? Will the SP crash...or nothing? Opinions?
No different from rolling a dice. :rolleyes:

Feel free to stock water, ammo, can of beans, cigarettes and gold/silver coins just in case.

BTW, did I mention 2012?
 

nottyboi

Well-known member
May 14, 2008
22,447
1,325
113
I hope to hell all these stimulus measures come to a quick end. Basically amounts to digging holes in the ground and filling them in again. Japan has tried that for 20 years without success. It does nothing for long-term growth or productivity.

Spending ........Not equal to ........economic growth in the long term.. You have to produce first, then spend. Says law.

The easiest way to deal with all the nincompoops who feel that we have to spend our way to prosperity is to think of yourself marooned on a deserted island with a group of people. I assure you , y'all could try and spend and 'demand' all you wanted, but until someone actually produced something, nothing would happen.
Well you say that, but no one knows if they were better off or worse of even with the so called lost decade.
 

nottyboi

Well-known member
May 14, 2008
22,447
1,325
113
No different from rolling a dice. :rolleyes:

Feel free to stock water, ammo, can of beans, cigarettes and gold/silver coins just in case.

BTW, did I mention 2012?
2012 solar maximum .. if that turns out real bad we're all dead anyway..
 
B

burt-oh-my!

Well you say that, but no one knows if they were better off or worse of even with the so called lost decade.
There is a disconnect between spending now, and building up debt, which is NOT spending later, plus interest. Debt equals LESS spending inthe long run.
 

nottyboi

Well-known member
May 14, 2008
22,447
1,325
113
There is a disconnect between spending now, and building up debt, which is NOT spending later, plus interest. Debt equals LESS spending inthe long run.
yeah but therein lies the magic... Firstly Japanese debt is mostly domestically financed.. interest rates are almost zero. The bank of Japan lends the Japanese banks and post office money to buy bonds and the interst they charge the banks is almost the same as what the govt pays..and all the interest from the Japanese cent bank gats paid too? YOu GOT IT.. the Japanese Treasury!!! Same think with the Fed...they earned 87B in interest last year from T bills and loans.. all of which went to the US Treasury....that 87B is pretty much ALL the interst in the 2T or so in additional debt the US govt has incurred since the economic implosion. How long can this little scheme go on? No one knows, but Japan kept it going for over a decade now. Most large holders if US debt are really quite terrified of unloading their US bonds as it may trigger an implosion. Also, it is possible the US Fed has put options on the toxic waste it purchased from the large US banks... so if they don't play ball, they may get their dirty toilet paper shoved down their throats.
 

FatOne

Banned
Nov 20, 2006
3,474
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After QE2 we should get KC3, unless Charles decides to William the nod in which case we will have KW3
 

hinz

New member
Nov 27, 2006
5,672
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After QE2 we should get KC3, unless Charles decides to William the nod in which case we will have KW3
LOL....:cool:

BTW, should I address the newly engaged Prince William and Kate Middleton as WC?
 

oil&gas

Well-known member
Apr 16, 2002
12,221
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Ghawar
About 200B more in QE2.. to go...most observers are saying there will be no QE3 as the US economy is no longer in an "emergency state". So what happens when the 100B/month of cash infusions stop? Will the 20 year implode? Will the US$ spike? Will gold plunge? Will the SP crash...or nothing? Opinions?
Not a prediction but here is a possible sequence of events I anticipate
to transpire this year.

QEII will end.

A liquidity crunch triggered by falling real estate prices (possibly
commercial as well as residential this time) will bring about a market
crash like it did in 2008. For commodities I expect silver prices
to suffer the most violent correction like a 25--30% drop. Pullback
of gold bullion prices would probably be modest while any spike
in US treasuries would be temporary and more short-lived than it
was in 2008. Bernanke will then be forced to launch QEIII. This joy
ride to global economic implosion will end in hyperinflation.

The best protection against the impending liquidity crunch is
obviously a cash position. If you are the brave type consider such
hedging tools as reverse index ETFs.

During the interim period between QEII and QEIII after the
major stock market indexes drop by about 20--25% buy
Canadian stocks with both hands. Focus on stocks in the
sectors of energy, utility, agriculture and precious metals.
I also expect to find values in Canadian REITs. Stocks such
as Boardwalk, Crombie and Northern Property REIT should be
core holdings in a model Canadian stock portfolio.
I may have to revise my bullish outlook on Uranium in light of
the tsunami disaster. Other than Uranium I will buy anything related
to energy. The whole world is going to have to live with a perpetual
energy crunch for much of the rest of the century.
 
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