There is now rampant talk about a revived FED QE4 program, most powerfully talked about by Bridgewater’s Ray Dalio and Larry Summers (from the genetically powered economics family of Samuelson and Arrow). On December 24, Santelli and I considered the possibility of QE4 (see clip below). I posed this question to all investors: How would the equity markets react if the FED had to reignite its large asset purchases?
Tags:Fed, G-20, Japan, Larry Summers, QE4, Ray Dalio, RBA, Won, Yen, Yuan
Posted in Fed | 3 Comments »
Never has so much money been riding on ONE WORD from a monetary authority. The issue isn’t the idea of FED PATIENCE in regards to raising rates for if the FED increases the effective rate to 37 basis points from 12 basis points IT IS MEANINGLESS. The issue for the FED is the huge pile of bank reserves sitting at the central bank to the tune of $2.7 TRILLION (and let’s not forget the FED‘s $4.5 TRILLION balance sheet). If the economy begins to heat up and banks begin to circulate those RESERVES, the FED will have a velocity of money problem as the ECONOMY MAY BE AT SOME LEVEL OF FULL EMPLOYMENT. It’s not an interest rate problem for the FED but a RESERVE PROBLEM.
Tags:Christine Lagarde, dual mandate, Fed, Fed Funds, FOMC, forward guidance, IMF, Janet Yellen, patience, Ray Dalio, Stanley Fischer, U.S. Dollar
Posted in Fed | 15 Comments »
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