Can someone explain QE3 to me?

Discussion in 'Trading' started by bonds, Sep 13, 2012.

  1. bonds


    Bernanke said he is buying 40 billion dollars a month in mortgage securities... even if the economy starts to improve.

    so basically over 1 billion+ dollars a day

    where is he getting the money? is he just printing it? so is he basically increasing the money supply by over a billion dollars a day indefinately?

    How will this solve the employment problem?

    How will this not create another housing bubble?
  2. I'm guessing that MBS are used as reserves at many banks that are TBTF..... there would be vicious deflation if they were actually sold on the open market (since mark to model is now dead). So.... FED buys them in order to prevent banks from falling below reserve requirements. Recall that in fractional reserve banking, money supply is a multiple of reserves.

    Where is the new money coming from? Decree. Yes, your overlords have decided to keep themselves in business.

    He who spends the new money first, wins.

    But I think deflation would be much worse. If EBT / SNAP went poof, there would be riots in most major cities. Welfare is a bribe to keep the populace from revolting. QE is necessary, in this environment, toward that end.

  3. you don't need to worry about a housing bubble because the economy is a wreck the only thing up is the markets because of free money. he has made up this own economic model that printing free money will make jobs and than that will create a great economy and than his investments will go up so america will make money from that too. his problem is if they don't create jobs we fall into a really deep depression with his game plan.

  4. 007Arb


    Bernanke is targeting the rebounding housing market by concentrating on MBS securities and hopefully the jobs that market will create if the rebound is for real. The MBS market has been very strong the past few weeks with a narrowing in spreads with Treasuries so at least some weren't surprised with the QE 3 announcement today. And it's not like his last big effort hasn't worked in buying MBS with the QE 1 announcement on November 25, 2008 as the Dow is many thousands of points higher.
  5. his job is the economy not the markets. how is the economy? this is a man who keeps doubling down his bet and has yet to win.

  6. Bob111


    mmmm...we are at 10 years high(!).. market is super fuckin mega fine..

    economy? who's asking for help? NAME IT. who's asking for more free money? they are already free..banks can borrow from fed for free regardless...did it worked in QE1-2,TARP, whatever? if it didn't what make you believe that QE3 will? imo FED now acting as a whore..trying to satisfy brothers in GS and's all about election and democrats to win..romney is a toast..
  7. I'd say it's the other way 'round - he has yet to lose.

    If Ben had lost on any of these gambits, we'd be looking at $60k as the median house price.
  8. He's doing nothing more than enabling the govt to charge trillions more at a teaser rate. It's complicity between both parties.

    FWIW, there are many areas in the US where real estate prices are still in decline.
  9. how is putting 3 trillion dollars in the market not rich welfare? it surely is not trickling down. the man went on tv today and begged big corporations to hire and promised to keep pushing money. you can't fake a recovery it takes time and pain. you really think they are going grow the economy starting from here?

  10. It absolutely is trickling down. Otherwise there would have been a complete collapse in US housing prices.

    For all the whining and complaining, these guys have been targeting exactly the asset class that has the most near-term benefit for "Main Street".
    #10     Sep 13, 2012