Thursday, February 24, 2011

QEIII?

Wow, just when you thought it was safe to go back in the markets....

* BULLARD SAYS 'NEVER SAY NEVER' REGARDING POSSIBILITY OF QE3

So we get 2 down days in the stock market and the Fed start talking about further easing? I was convinced that talk of QE3 was just tinfoil hat territory, but this definitely opens the possibility of more easing, more inflation, higher assets prices (ie, stock prices), higher food prices, higher commodity prices (oil, gas, copper, gold, etc).

Interesting to say the least.

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Thanks to a reader that pointed out that I slipped into a little bit of a financial coma and started speaking in Wall Street lingo.

QE3 is the rumored continuation of the Federal Reserves quantitative easing policies that have been in place since November's QE2 kicked off.

Through quantitative easing, the Federal Reserve creates money and buys government debt with the new money. The greatest risk of this easing is timing it's end so you don't kill a recovery or let it run too long to spark inflation. It's a tricky balancing act.

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