Will the Fed increase the money supply until prices are sky high?
*Dow Theory Letters, by Richard Russell, September 14, 2012
”The Fed is scratching its head. Why isn’t the darn QE working? What does it take to move the US economy UP? Ah, they’ve decided — what it takes is more and more and more QE or money-printing. So the new Fed program will be ‘QE to infinity,’ or the endless punch bowl — the Fed will do whatever it takes — for as long as it takes. The Fed will shovel $40 billion a month into the economy, and it will continue Operation Twist, and it will keep rates low until the mid-year 2015. The Fed’s theory — QE to infinity, at worst, will drive stocks higher, and higher stocks should cause consumers to become more optimistic, and if they are more optimistic, well, maybe they will loosen their purse strings — and buy, buy, buy, thereby pushing the US economy due north. So Bernanke and the Fed committee are going to take the big chance and print, print, print — until everything heads for the sky!
Quantitative easing involves increasing the money supply by buying assets such as government securities.”
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