"Quantitative easing will accomplish nothing beyond flooding the banks with cash which they will use, if at all, for speculating rather than lending."
Federal Reserve to buy $600 billion in bonds
“They are trying to break through the fear,” said J.P. Morgan Chase economist James Glassman.
Doubts persist about whether the plan will work, but many feel the Fed had little choice but to act.
Hippocratic Oath
I will apply dietic measures for the benefit of the sick according to my ability and judgment; I will keep them from harm and injustice.
Something needed to be done to keep us from harm and injustice. I can't think of a better option than feeding banks extra cash at our expense so that they can speculate on things such as heating oil as we head into the colder months.
As a side note, I have mentioned here more than a few times that I am not a believer in commodity driven stock markets. Most seem to be okay with that though. We'll just have to see how that works out long-term. Again.
Source Data:
EIA: Spot Prices for Crude Oil and Petroleum Products
I just caught up with Mish.
ReplyDeleteHe too quoted James Glassman today!
QEII Announced, Fed Set to Buy $600 Billion in Bonds, Reinvest $250 Billion More; Fed Micromanaged Economy to Oblivion; No Miracles Coming
“They are trying to break through the fear,” said J.P. Morgan Chase economist James Glassman.
Doubts persist about whether the plan will work, but many feel the Fed had little choice but to act.
Indeed!
Mish follows up with...
It is sad but true economic thinking these days that the "Fed had to do Something". Why does it make sense to do something, just for the sake of doing, when it should be crystal clear that doing just adds to problems down the road.
I clearly share that opinion.
Stag,
ReplyDeleteIt's all about having the worst of both worlds - high unemployment AND rising CPI prices.
What could be a better recipe for prosperity than that?
My word verification is "bombsta". Figures.
mab,
ReplyDeleteIt's all about having the worst of both worlds - high unemployment AND rising CPI prices.
I'm going to need to do a 1970s music tribute I think. Sigh.