Bernanke in Testimony Can Show Paul How QE2 Works in Market

Discussion in 'Economics' started by olias, Mar 17, 2011.

  1. olias


    "The next time Federal Reserve Chairman Ben S. Bernanke appears before Congress, here are a few visual aids he can use to show critics that quantitative easing is working:

    The Standard & Poor’s 500 Index of stocks has climbed 18 percent since he said Aug. 27 that additional asset purchases might be warranted.

    The risk premium on high-yield, high-risk bonds has narrowed to 5.16 percentage points from 6.81 percentage points, Bank of America Merrill Lynch index data show.

    Inflation expectations have jumped by 44.4 percent.

    The unemployment rate has fallen to its lowest level in almost two years.

    So much for 2008 Republican vice-presidential candidate Sarah Palin’s assertion that the “dangerous experiment” wouldn’t “magically fix economic problems.”

    Quantitative easing “was a key factor in taking deflation risk off the table,” said Peter Hooper, chief economist at Deutsche Bank Securities Inc. in New York. “It certainly helped bolster longer-term inflation expectations, and it was a factor that contributed to the rally in the stock market. Overall, I give it a good grade.”

    The Fed’s Nov. 3 decision to buy $600 billion of Treasury securities through June was dubbed QE2 by analysts and investors because it followed $1.7 trillion of asset purchases that ended in March 2010. The plan sparked the harshest political backlash against the central bank in three decades, with Republican lawmakers warning the additional stimulus risked causing a surge in prices. So far, they were wrong. "

  2. Tsing Tao

    Tsing Tao

    you're joking, right? this is about as clueless as articles can get. i mean, the god damned ppi and cpi data just released essentially show that food prices have risen the most since what, 1976?

    what a crock of shit.
  3. OK, either I misread the article or you did. It seems that you knee-jerk reacted negatively to an article that you agree with. The article was making the assertion that QE2 was the main driver behind the high inflation, and then you jumped in and called it "clueless" and restated the exact same thing.
  4. olias


    clearly you don't understand
  5. ElCubano


    the article is giving qe2 an A ("good grade") ..I think tao is giving qe2 an F.
  6. olias


    Right, but Tao is blaming QE2 for the rise in food prices. I think that is a tenuous argument.
  7. Tsing Tao

    Tsing Tao

    thank you for understanding my post, amigo.

    and yes, i blame food prices on QE2.
  8. Tsing Tao

    Tsing Tao

    is that you, Steve Liesman?
  9. olias


    If QE2 is causing inflation shouldn't it affect Core Inflation?

    "Core inflation is a measure of inflation which excludes certain items that face volatile price movements, notably food and energy."

    Core Inflation has been relatively low.

    Doesn't it make some sense to exclude food and energy?
  10. olias


    it's overly simplistic to say 'food prices are up!' = 'QE2 is causing inflation!' = 'Ben Bernanke is an idiot!'.

    It's just bugs me because that seems to be all that you hear.
    #10     Mar 17, 2011