By John Ballard
Ie QE3 near certain in Sep given worse macro."Some Fed policy makers favored �more substantial� action during Aug meet" http://t.co/WOlzokn
The issue is not if/whether the Fed will go for QE3 but only when. Most likely the first step will be on Sept 21st at the next FOMC meeting. As i twitted a year ago at the time of QE2 we will have next QE3, QE4 and eventually possibly even QE5. The latest column by Martin Wolf "Struggling with a great contraction" about the persistent recession in the G7 http://t.co/mNDnfLH. Its mostly semantic if you call it a Double Dip or a Big Dipper (continuation of the 1st contraction) or the Second Dipper (a new recession). Yes; that's why we need fisc stimul
@gcamilo:don't you find probable that w/o fiscal stimulus QE3 will not raise AD & just become reserves?
Saying we will see QE3 is a "positive" statement (matter of fact) not a "normative" one (matter of value judgement) In absence of other policy rabbits/bullets - fiscal stimulus, currency depreciation, bank bailout, debt reduction - QE is the 1 bullet left. QE3 can take many forms:
- Trsry's purchases
- lengthen maturities
- reduce IRER
- or inflation
- or nominal GDP
- or 10yr Treas yld targeting
And I might add, it's about the only measure anyone (read "Bernanke/Obama") can take that the GOP cannot block. They know that anything that hurts the economy is good for them in 2012.
(I just learned last week that this so-called "August break" for Congress isn't really a break at all. The Senate is convening pro forma so that the president cannot make any recess appointments. That's how checks and bvalances now works in Washington. These are the sanctimonious SOB's who prate about Constitutional principles.)
Nouriel you forgot one bullet...prayer apparently is the main economic tool for many on the right.
Indeed, "Hallelujah & Amen! "