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5 Responses to “Notes From Underground: Why Fed Will Likely Taper in September (CNBC)”
Will this be a meaningful tapering (30-40 B) or a symbolic one (10-15B)? And if we ever get to a meaningful one and the equity markets tank and long rates accelerate upwards, what will BB do then? Watch or put it into reverse?
What are your thoughts on GOLD should they taper? Is the tapering already priced in? I’m also a little confused about how the velocity of money will increase should there be a requirement for collateral?
Nate—as you wrote your question I am in the middle of Manmohan Singh ‘s paper–Collateral and Monetary Policy–page 12 will help you along.Now for the Gold—while the long end of the curve has risen,sending rates higher,the gold has rallied 15%—that to me is why the curves–2/10 –which has steepened is far more important then just the outright rates
Thanks, Yra. A little difficult for me to understand fully (with limited economics ed.), but I think I get the point. Everything seems so complicated given the Algo-driven market, different vehicles for investment/speculation/outright theft… etc. Quite the scary world when there is little time to spend on researching economics. Everything seems like a daunting task these days. When the Central banks/hedge funds/money managers propagate so much complexity, knowing human nature tends to be corrupt, I’m shocked we haven’t collapsed by now…