Registered: Aug 2006
09-13-12 09:55 PM
Bernanke Goes All In: What It Means for You
By Jeff Macke | Breakout 2 hours 50 minutes ago
Unlike QE1 and QE2, no dollar amount or time-limit was placed on the program. The Fed essentially announced it will be purchasing $40 billion in MBS per month until further notice.
This is a monster, huge, gargantuan change from prior operations. QE1 "cost" $1.7 trillion. QE2 was half a trillion, give or take. The new plan isn't really QE3, because it's never scheduled to end. It is an entirely different, frightening animal.
Bottom Line: The Fed has made up new rules by lifting all restraints on existing policies. Should they desire different stimulus, the Fed will need to invent a whole new policy. It's a bullish move in the sense that pouring more money into the system inflates values. Stocks, gold, oil... basically everything except the dollar "should" go up in value.
Longer term we're now way, way into unknown territory. As Bernanke himself often says, monetary policy isn't a panacea.
Then again, the same man just gave the economy the biggest injection it's ever seen. How will it all end? Literally nobody knows, but for now stocks are higher, bears are furious and bulls are giddily confused.
Also, the president just got re-elected.