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QE3, Deflation And The Fed’s Money Illusion
The announcement last week by the Federal Open Market Committee that the central bank would initiate additional, open-ended purchases of residential mortgage backed securities (RMBS) was more than a little sad. Let us count the ways.
The first reason for sadness was the idea that people here in New York and elsewhere in the global financial community were actually surprised by the Fed’s move. The FOMC is fighting deflation. Credit continues to contract globally as much of the western world goes on a pure cash budget. So while I would like to see the Fed raise short term rates, the fact is that the central bank has little choice but to support the markets. But buying RMBS will neither help housing nor reverse the current deflationary spiral on which we all ride …. http://dailybail.com
2012-09-19 19:42:01
Source: http://luismmx.blogspot.com/2012/09/qe3-deflation-and-feds-money-illusion.html
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