Jim Rickards spells it out. QE will never end. Technically QE will end by name only. The Fed is preparing to conduct QE in secret but the will call it "Stock and Flow". The fed answers to no one and is a criminal organization, We are truly living in a hijacked state we need a revolution and force are way into the criminal fed organization and have these guys jailed.
This is what QE lite was all about; rolling over maturing bonds in to new purchases.
There are a couple of problems with his analyis. First a lot of this is coming from true garbage (ABS and MBS) and a good chunk will never mature; it is worthless. Second, a lot of this is 30 year stuff. I tried to follow his rollover numbers and it did not add up. I do not think the rollover will be as big as he thinks for the next several years.
Third, he is assuming we have no inflation and they will not have to raise rates. The FEd can rollover all they want but it will be hard to explain why they are buying bonds AND raising the fed funds rate.
This is one of the more important posts on the board. Everyone (including Bill Gross from PIMCO) is assuming that QE2 is done and no more, at least not at first.
Bill Gross is pretty smart. I have been hearing this "stock and flow" argument for some time. Basically it is saying that the Fed has bought nearly $3 trillion of securities (stock) and they can just roll over the maturing bonds in to more purchases instead of issuing more QE (flow).
The numbers just do not add up. The Treasury has been buying no short term bills.
They did buy about $35 billion bonds that mature in 2011; so they have this plus whatever MBS matures which is long dated stuff; not much here.
It was clever of the Fed to tier the maturities such that maturing bonds could be rolled over but it will not equal the $20 billion a week we get now; according to my calculations.
So this guys view is simplistic; I am stickingwith Bill Gross.
Wow. Good stuff thanks. The Fed has declared war on the middle class and Obama has signed off on it. Fed has 1 Mandate to keep the Rich and Powerfull secure and safe- everybody else must pay to keep the Status Quo.