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(CNBC)   QE3 sets sail on a voyage that is sure to end in a sinking   (cnbc.com) divider line 87
    More: Interesting, Federal Reserve, Asian Tigers, small-cap, investment strategist, open market, Federal Reserve Chairman Ben Bernanke, money creation, interest rates  
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2118 clicks; posted to Business » on 13 Sep 2012 at 3:41 PM (2 years ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2012-09-13 03:16:13 PM  
Market is up big today. Looks like Wall St. likes a little bit of Socialism.
 
2012-09-13 03:34:00 PM  
Sucks that news this big is relegated to the stinky business tab.
 
2012-09-13 03:37:49 PM  
So...how much is a loaf of bread going to cost next year? People will be biatching then.
 
2012-09-13 03:43:01 PM  
In before the goldbugs and hyperinflation witches start their herp-derp!

Good to see the FED actually, finally focusing on it's dual mandate.
 
2012-09-13 03:44:37 PM  

gopher321: So...how much is a loaf of bread going to cost next year? People will be biatching then.


So is the hyperinflation wolf really coming this time?

\Any increase in the price of bread will have more to do with droughts than with monetary policy.
 
2012-09-13 03:45:28 PM  

max_pooper: gopher321: So...how much is a loaf of bread going to cost next year? People will be biatching then.

So is the hyperinflation wolf really coming this time?


Are there ANY examples of hyperinflation occurring simply as a result of monetary policy and not due to some external shock, like war or famine?
 
2012-09-13 03:51:33 PM  
Welcome to Groundhog Day, the macroeconomic version: Last week, Ben Bernanke popped out of Jackson Hole, saw his shadow this morning, and announced $40B/month of QE3... "until such improvement [in the outlook for the labor market] is achieved in a context of price stability," which could be a wee bit longer than six weeks.

I own some of the high-beta stuff that's benefiting from today's little party, and I'm having a rather delightful day. My little governors are finally getting the message: printing is magic.
 
2012-09-13 03:53:07 PM  
DamnYankees: max_pooper: gopher321: So...how much is a loaf of bread going to cost next year? People will be biatching then.

So is the hyperinflation wolf really coming this time?

Are there ANY examples of hyperinflation occurring simply as a result of monetary policy and not due to some external shock, like war or famine*?


While also happening in conjunction with a total political meltdown / vacuum. Honestly, if you worry is hyperinflation, Teabaggers getting a hold of all three branches of government would be the biggest signal it's coming.

Argentina is pretty much the only state to experience it without a major political instability/stupidity being the route cause. And there's even a case against that.
 
2012-09-13 03:54:56 PM  

DamnYankees: max_pooper: gopher321: So...how much is a loaf of bread going to cost next year? People will be biatching then.

So is the hyperinflation wolf really coming this time?

Are there ANY examples of hyperinflation occurring simply as a result of monetary policy and not due to some external shock, like war or famine?


Zimbabwe. Germany (unless you count world war I as the cause). Argentina.
 
2012-09-13 03:55:38 PM  
content6.flixster.com

"Inflation -- dead ahead!!!"
 
2012-09-13 03:57:41 PM  

DamnYankees: Are there ANY examples of hyperinflation occurring simply as a result of monetary policy and not due to some external shock, like war or famine?


Japan had no inflation, but then QE caused it to do pretty much nothing.
growlersoftware.com
 
2012-09-13 03:58:23 PM  
I just wish I could take my 401K money out of the market in like 4-8 week's time. Stock market is already up and up since a few weeks back in anticipation for QE3.

My thought was if the Fed didn't announce QE3 the stock market would plummet. Now it's just going to coast upward for a couple months until the fiscal cliff is acted upon.
 
2012-09-13 03:59:25 PM  

Debeo Summa Credo: Germany (unless you count world war I as the cause).


This is the monetary policy version of "it's only a flesh wound".
 
2012-09-13 04:04:49 PM  

Debeo Summa Credo: DamnYankees: max_pooper: gopher321: So...how much is a loaf of bread going to cost next year? People will be biatching then.

So is the hyperinflation wolf really coming this time?

Are there ANY examples of hyperinflation occurring simply as a result of monetary policy and not due to some external shock, like war or famine?

Zimbabwe. Germany (unless you count world war I as the cause). Argentina.


Zimbabwe and Argentina were due to massive government bungling of the economy on a scale we haven't come close to, particularly Zimbabwe, and Germany's was due to reparations.
 
2012-09-13 04:04:55 PM  
FYI, this is what hyperinflation looks like. Yes, the graph is logarithmic.

growlersoftware.com
 
das
2012-09-13 04:05:34 PM  

Debeo Summa Credo: DamnYankees: max_pooper: gopher321: So...how much is a loaf of bread going to cost next year? People will be biatching then.

So is the hyperinflation wolf really coming this time?

Are there ANY examples of hyperinflation occurring simply as a result of monetary policy and not due to some external shock, like war or famine?

Zimbabwe. Germany (unless you count world war I as the cause). Argentina.


Post Soviet Russia.
 
2012-09-13 04:05:47 PM  

Starfly: I just wish I could take my 401K money out of the market in like 4-8 week's time. Stock market is already up and up since a few weeks back in anticipation for QE3.

My thought was if the Fed didn't announce QE3 the stock market would plummet. Now it's just going to coast upward for a couple months until the fiscal cliff is acted upon.


I believe you can... well, at least I can with my 401K. You can move some or all of it to a safe cash type of investments that your 401K administrator might offer. Look into it.
 
2012-09-13 04:08:46 PM  

das: Post Soviet Russia.


Again, you do realize that this happened as a result of the dissolution of a world empire, and not expansionary monetary policy to get out of a recession, right>
 
2012-09-13 04:09:27 PM  

DamnYankees: max_pooper: gopher321: So...how much is a loaf of bread going to cost next year? People will be biatching then.

So is the hyperinflation wolf really coming this time?

Are there ANY examples of hyperinflation occurring simply as a result of monetary policy and not due to some external shock, like war or famine?


Not other than Zimbabwe. And as much as some people believe that Obama=Mugabe, it just isn't the case. It takes TALENT to screw up an economy as badly as Mugabe has managed.
 
2012-09-13 04:11:42 PM  
s16.postimage.org
 
2012-09-13 04:13:59 PM  

HMS_Blinkin: DamnYankees: max_pooper: gopher321: So...how much is a loaf of bread going to cost next year? People will be biatching then.

So is the hyperinflation wolf really coming this time?

Are there ANY examples of hyperinflation occurring simply as a result of monetary policy and not due to some external shock, like war or famine?

Not other than Zimbabwe. And as much as some people believe that Obama=Mugabe, it just isn't the case. It takes TALENT to screw up an economy as badly as Mugabe has managed.


Also, 20 years of mismanagement, and the transition from an economy governed by race.
 
2012-09-13 04:18:52 PM  
To be fair to Fark-Economists, hyperinflation = any inflation greater then yesterdays inflation under 0bama.

We should at least set the metrics correctly for them before they show up.
 
2012-09-13 04:21:35 PM  

hugram: Starfly: I just wish I could take my 401K money out of the market in like 4-8 week's time. Stock market is already up and up since a few weeks back in anticipation for QE3.

My thought was if the Fed didn't announce QE3 the stock market would plummet. Now it's just going to coast upward for a couple months until the fiscal cliff is acted upon.

I believe you can... well, at least I can with my 401K. You can move some or all of it to a safe cash type of investments that your 401K administrator might offer. Look into it.


Yeah as i was writing it i was thinking, how long does it take for allocations to take? Granted i've only been investing into 401k for six years, and only heavily increased contribs in the last 6 months.
 
2012-09-13 04:22:33 PM  

Debeo Summa Credo: DamnYankees: max_pooper: gopher321: So...how much is a loaf of bread going to cost next year? People will be biatching then.

So is the hyperinflation wolf really coming this time?

Are there ANY examples of hyperinflation occurring simply as a result of monetary policy and not due to some external shock, like war or famine?

Zimbabwe. Germany (unless you count world war I as the cause). Argentina.


Pretty sure Zimbabwe had famine. Or rather the famine and the hyperinflation had a common cause, which was Mugabe's radical land "reforms".
 
2012-09-13 04:26:44 PM  

gopher321: So...how much is a loaf of bread going to cost next year? People will be biatching then.


TyrantII: In before the goldbugs and hyperinflation witches start their herp-derp!.


Oooh...so close.
 
2012-09-13 04:28:06 PM  

Starfly: hugram: Starfly: I just wish I could take my 401K money out of the market in like 4-8 week's time. Stock market is already up and up since a few weeks back in anticipation for QE3.

My thought was if the Fed didn't announce QE3 the stock market would plummet. Now it's just going to coast upward for a couple months until the fiscal cliff is acted upon.

I believe you can... well, at least I can with my 401K. You can move some or all of it to a safe cash type of investments that your 401K administrator might offer. Look into it.

Yeah as i was writing it i was thinking, how long does it take for allocations to take? Granted i've only been investing into 401k for six years, and only heavily increased contribs in the last 6 months.


It's the next business day for me, but I can only make interfund transfers twice a month. Back in the hayday people were basically day-trading their retirement funds...
 
2012-09-13 04:33:07 PM  

hugram: I believe you can... well, at least I can with my 401K. You can move some or all of it to a safe cash type of investments that your 401K administrator might offer. Look into it.


That's my plan for the end of the year. I plan to ride this free money gravy train for a few months and then buy big after the crash!
 
2012-09-13 04:38:37 PM  
I still don't understand why we're throwing free money at the market. If we're going to throw free money at anyone, it should be consumers that will actually circulate it a little.
 
2012-09-13 04:41:43 PM  

m1ke: hugram: I believe you can... well, at least I can with my 401K. You can move some or all of it to a safe cash type of investments that your 401K administrator might offer. Look into it.

That's my plan for the end of the year. I plan to ride this free money gravy train for a few months and then buy big after the crash!


I might do something similar too. I was thinking about doing that back in 2007 when the DOW hit 14,000 without any reason to get that high in the first place. I did not change anything on my 401K... in fact, I increase my contribution... but I would not like to go through the down turn that we all went through in 2008 and 2009.

This time around, I don't want to lose all of the nice gains I have made for the last 3 years or so... The economy is in better shape right now than it was back then, so I might not go full cash...
 
2012-09-13 04:43:04 PM  

IrateShadow: I still don't understand why we're throwing free money at the market. If we're going to throw free money at anyone, it should be consumers that will actually circulate it a little.


The Fed said it will buy $40 billion of mortgage-backed securities per month in an attempt to foster a nascent recovery in the real estate market.
 
2012-09-13 04:44:12 PM  

Arkanaut: Debeo Summa Credo: DamnYankees: max_pooper: gopher321: So...how much is a loaf of bread going to cost next year? People will be biatching then.

So is the hyperinflation wolf really coming this time?

Are there ANY examples of hyperinflation occurring simply as a result of monetary policy and not due to some external shock, like war or famine?

Zimbabwe. Germany (unless you count world war I as the cause). Argentina.

Pretty sure Zimbabwe had famine. Or rather the famine and the hyperinflation had a common cause, which was Mugabe's radical land "reforms".


Famine doesnt cause inflation. Printing money caused inflation in Zimbabwe. As it did in Germany and argentina. All those other excuses (famine, reparations, economic mismanagement) were all factors that led to the printing of money, that in turn caused hyperinflation.

The fear expressed by some is that the fed's crappy economy induced loose policy (effectively printing money), will cause higher inflation.

Hopefully the fed will be able to react quickly enough to pivot if inflation becomes a problem, by tightening (e.g. selling all these mortgages that they'll be buying under QE3.)
 
2012-09-13 04:46:05 PM  

impaler: The Fed said it will buy $40 billion of mortgage-backed securities per month in an attempt to foster a nascent recovery in the real estate market.


Recovery in the real-estate market is the last thing we need at this point. Houses are still overvalued in most markets.
 
2012-09-13 04:46:35 PM  
Woot woot!
www.screw-paypal.com

I'm pretty confident gold will break it's nominal high of $1,920 sometime before the end of 2012 and will break it's inflation-adjusted high of $2,300 by Q1 2013.

A noteworthy investor who is now bullish on gold - Bill "Bond King" Gross of PIMCO. He made billions in bonds over his career, but he said last week that in the current market environment, gold is better than stocks or bonds. Also increasing their gold purchases in 2012 - George Soros, John Paulson, Dennis Gartman, the central banks of Russia, China, South Korea, Turkey and Mexico.

I'd say the bubble is starting to inflate, but there's still a couple years before this thing gets too wild and pops. I'm going to enjoy this ride, though.
 
2012-09-13 04:51:14 PM  
I'm liking silver.
 
2012-09-13 04:59:25 PM  

impaler: IrateShadow: I still don't understand why we're throwing free money at the market. If we're going to throw free money at anyone, it should be consumers that will actually circulate it a little.

The Fed said it will buy $40 billion of mortgage-backed securities per month in an attempt to foster a nascent recovery in the real estate market.


If this is the silly thing we're doing, better to just buy and cancel consumer debt directly.
 
2012-09-13 05:02:03 PM  
*Bernank cracks whip*

Whaa-pishhhh!!

"Consume damn you!! Consume!!"

Whaa-pishhhh!!
 
2012-09-13 05:03:06 PM  

YixilTesiphon: impaler: IrateShadow: I still don't understand why we're throwing free money at the market. If we're going to throw free money at anyone, it should be consumers that will actually circulate it a little.

The Fed said it will buy $40 billion of mortgage-backed securities per month in an attempt to foster a nascent recovery in the real estate market.

If this is the silly thing we're doing, better to just buy and cancel consumer debt directly.


Once you cancel it you no longer have the asset. It'd result in an immediate loss of $40b to the fed.

The fed is buying mortgage debt that it will hold and collect principal and interest on.
 
2012-09-13 05:03:22 PM  

IrateShadow: impaler: The Fed said it will buy $40 billion of mortgage-backed securities per month in an attempt to foster a nascent recovery in the real estate market.

Recovery in the real-estate market is the last thing we need at this point. Houses are still overvalued in most markets.


By what metric?
 
2012-09-13 05:05:12 PM  
As long as the government has self-control over their monetary policy, there will not be hyper inflation (unless the government explicitly wants hyper inflation). They can throttle back the money supply just as easily as they can increase it
 
2012-09-13 05:07:21 PM  

Debeo Summa Credo: Once you cancel it you no longer have the asset. It'd result in an immediate loss of $40b to the fed.


They're printing the money anyways, so why does it matter?
 
2012-09-13 05:17:09 PM  

YixilTesiphon: Debeo Summa Credo: Once you cancel it you no longer have the asset. It'd result in an immediate loss of $40b to the fed.

They're printing the money anyways, so why does it matter?


Well, they're printing it now and expect to withdraw it at a later time. Net impact on long term money supply is zero. If they give it away and never draw it back, the impact is an increase of $40b per month.

So basically, following on lost thought 00's correct post above. Just printing money and giving it away is what can cause hyperinflation. Being cautious by buying assets with cash injected into the economy, which you can sell to redeem cash when you want, is prudent.
 
2012-09-13 05:19:51 PM  

Debeo Summa Credo: Once you cancel it you no longer have the asset. It'd result in an immediate loss of $40b to the fed.

The fed is buying mortgage debt that it will hold and collect principal and interest on.


Indeed. Doing that would literally be the closest thing to actually "printing money" as most people envision "printing money" to be.

If the Feds ever give people money without acquiring an asset in return, I would highly recommend buying gold.
 
2012-09-13 05:20:11 PM  

Debeo Summa Credo: YixilTesiphon: Debeo Summa Credo: Once you cancel it you no longer have the asset. It'd result in an immediate loss of $40b to the fed.

They're printing the money anyways, so why does it matter?

Well, they're printing it now and expect to withdraw it at a later time. Net impact on long term money supply is zero. If they give it away and never draw it back, the impact is an increase of $40b per month.

So basically, following on lost thought 00's correct post above. Just printing money and giving it away is what can cause hyperinflation. Being cautious by buying assets with cash injected into the economy, which you can sell to redeem cash when you want, is prudent.


Makes sense. Thanks.
 
2012-09-13 05:20:23 PM  
Idiotically thought this was about the Queen Elizabeth III.

Leaving thread feeling like an idiot.
 
2012-09-13 05:21:46 PM  

Spare Me: I'm liking silver.


Good choice. Silver is up nearly 25% in the last 30 days alone. Many of the prognosticators I've read say that silver is likely to outperform gold because the gold/silver price ratio is way out of whack and will eventually correct itself.
 
2012-09-13 05:32:53 PM  

DamnYankees: das: Post Soviet Russia.

Again, you do realize that this happened as a result of the dissolution of a world empire, and not expansionary monetary policy to get out of a recession, right>


No they don't. Or if they do, they won't admit it because it's inconvenient and doesn't match how they think the world should be.
 
2012-09-13 05:51:52 PM  
IrateShadow: I still don't understand why we're throwing free money at the market. If we're going to throw free money at anyone, it should be consumers that will actually circulate it a little.

The idea is to tick up inflation slightly, while setting a policy that low interest rates will be raised sooner then later.

If a large companies vault of cash might see it's value go down from holding on to it, it makes sense to instead spend it on capital improvements. That drives demand in real estate, industrial machinery, other capital goods. People need to supply that work and those things, so those people then have money and consumer demand is raised form their fortunes. That demand filters back to these corps seeing upticks in demand, and then new hiring.

Hard money and very low inflation is actually not a good thing for the economy, or for long term investment. It only benefits those who want to hoard large amounts of savings.
 
2012-09-13 05:56:25 PM  

Lost Thought 00: As long as the government has self-control over their monetary policy, there will not be hyper inflation (unless the government explicitly wants hyper inflation). They can throttle back the money supply just as easily as they can increase it


Thankfully, the Fed isn't (directly) controlled by the government. "Self control" in our current political environment? Letmelaughharder. jpg
 
2012-09-13 06:07:44 PM  
i.imgur.com
 
2012-09-13 06:47:35 PM  

IrateShadow: impaler: The Fed said it will buy $40 billion of mortgage-backed securities per month in an attempt to foster a nascent recovery in the real estate market.

Recovery in the real-estate market is the last thing we need at this point. Houses are still overvalued in most markets.


The biggest problem with the real estate market is that banks are almost unwilling to underwrite loans, so no one can afford one to purchase one anyway. Give the banks a boot in the ass, and the housing market gears will loosen up a little.
 
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