The Future Direction of QE Is...?
The future direction of QE was revealed by Fed Governor Jerome H. Powell in a recent speech.
As you may remember, the slightest hint from Ben Bernanke that the Fed would cut back on bond purchases (QE) tanked the stock market a while ago. Along with stock prices falling, bond prices continued to fall, as well as gold. I'm not sure what didn't fall, in fact.
Now Fed Governor Powell's recent speech tells us more about Fed policy going forward - and it's decidedly intended to be as "non-committal" as you can possibly imagine. Take a look:
I'm sure these Fed guys think they can actually react to the economy in a timely and efficient manner...They do, don't they? How they do that, Powell does attempt to explain in his speech. But you do have to wonder just how it is that they really can react the way they say they can. The only way that happens is if they're like puppet masters tugging at strings 24/7 to keep the economy humming. Is that what a real, healthy economy looks like - a bunch of puppets being pulled and tugged from "on high" by a group of master puppeteers?
I don't know about you, but I sometimes get the impression that's what these Fed fellows must believe. But no matter: I think Powell accomplishes his objective of pushing us into panic-off mode and getting us all to feel like either Fed purchases may not really be cut back in a few months, or that the Fed guys really are in control and know exactly what they're doing...and it will all turn out just fine.
Okay if you want to believe that.
As you may remember, the slightest hint from Ben Bernanke that the Fed would cut back on bond purchases (QE) tanked the stock market a while ago. Along with stock prices falling, bond prices continued to fall, as well as gold. I'm not sure what didn't fall, in fact.
Now Fed Governor Powell's recent speech tells us more about Fed policy going forward - and it's decidedly intended to be as "non-committal" as you can possibly imagine. Take a look:
If the Committee's economic outlook is broadly realized, there will likely be a moderation in the pace of purchases later this year. If the performance of the economy is weaker, the Committee may delay before moderating purchases or even increase them. If the economy strengthens faster than the Committee anticipates, the pace of purchases may be moderated somewhat more quickly. The path of purchases is in no way predetermined; we will monitor economic data and adjust our purchases as appropriate.Which means exactly what?...Well, that's just the point. It keeps us guessing and therefore prevents us from reacting too much. And that prevents the stock market from continuing its swoon. Indeed, stocks turned up after their initial swoon. And not only stocks, but bonds even eased up on their downward drift.
I'm sure these Fed guys think they can actually react to the economy in a timely and efficient manner...They do, don't they? How they do that, Powell does attempt to explain in his speech. But you do have to wonder just how it is that they really can react the way they say they can. The only way that happens is if they're like puppet masters tugging at strings 24/7 to keep the economy humming. Is that what a real, healthy economy looks like - a bunch of puppets being pulled and tugged from "on high" by a group of master puppeteers?
I don't know about you, but I sometimes get the impression that's what these Fed fellows must believe. But no matter: I think Powell accomplishes his objective of pushing us into panic-off mode and getting us all to feel like either Fed purchases may not really be cut back in a few months, or that the Fed guys really are in control and know exactly what they're doing...and it will all turn out just fine.
Okay if you want to believe that.
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