dear comrade, i for one, believe the fed was and is trying to do the right thing. the fed is working within the system --- its rules and its given capacities to effect economic change by monetary means. the real question you should be asking is, and which i'm asking you, does this system constitute the right foundation from which anyone can work towards putting the economy on a stable course??
Ah, that is, indeed, a most interesting question. Let's put together a list of alternatives and we will be able to figure out if any of them are "better".
I am sure you could give some excellent arguments. But the anti Fed side of the coin is all speculation. It could be better, it could be far worse. It boils down to this. We really do not know what the world would be like if the Fed had not been in charge in this post WWII world. I suspect... when out bankers just like our politicians were working for the American people we benefited greatly from the Fed allowing our banks to be the strongest in the world. But, at some point our bankers went more global. Then at another point our bankers focus became very short term. (about the time their wall street partnerships went public, thereby reducing their need to keep the partnership money in tact.) Finally, I think China gets too cozy with our bankers and buys too many of out politicians. In my opinion we need out bankers and our politicians back. Our bankers need to focus on making congress more fiscally responsible. Let our bankers make money by making us money and in effect keeping us stable.
like intradaybill said, the fed is printing money to save the monetary system / status quo / banks. there is a massive increase in production output and capacity. without QEs there will be a giant deflation which will hit primarly banks. chinese and the rest of the world still buys U.S. papers in exchange for goods and commodities. until they love to receive worthless paper- its all good, party, hoooooray and the Fed will continue with its policy. only when chinese will stop shipping to US, it could be a problem...
I bet it QE went straight into Americans pockets as a check it would work. QE just ends up sitting as reserves collecting interest.
china has been manipulating the invisible hand of economics by pegging to the dollar. They were allowed to switch out of trillions of failed investments. How does that happen in a free market?
that's exactly what happened - Fed printed money and gave it to the government through banks government spent it on all kind of social programs - food stamps, EI etc. so money were eventually given to people and that's why QE was inflationary. What will happen now - Fed stopped printing money but government still needs money. So in theory assets (stocks) will be sold to satisfy demand for money
MNI News Alert - Fed's Lacker: Zero Rates Through Mid-2013 'Highly Contingent' Richmond Federal Reserve Bank President Jeffrey Lacker said Monday that the Federal Open Market Committee's decision last Tuesday to extend its expectation of keeping the federal funds rate "exceptionally low" through mid-2013 was not warranted, but he emphasized the Fed's policymaking body did not lock itself into keeping the funds rate near zero. The FOMC's new "forward guidance" is "highly contingent" and subject to change as economic and/or inflation circumstances evolve, Lacker said in an exclusive interview with Market News International's Steve Beckner, on the MNI main wire at 15:00 ET. To read the story mentioned in the news alert go to The Main Wire on the platform where you normally view MNI's products: www.marketnews.com Bloomberg - MNS <GO> Reuters - MNSI <F9> Telerate - Page 1400
Don't blame the Fed, blame congress. What has been the explicit aim of the QEs? If it is to provide growth - then no it has not provided enough growth to justify the levels of currency debasement. BUT, if it is to avoid volatile debt and default of various assets - that has been avoided. When people say that the US should let the market correct - how much do they expect slashed spending to subtract from GDP? The immediate weight of the debt will be felt even harder if they slash spending. Sustainability is not reached through sinking the boat now. I don't think QE solves the fiscal problem, but it gives price stability given the huge debt vowen into the system. The expansionary policy is better today than contractionary ones. Government is still running a 1 trn USD deficit annually and that will be met with big ass number expansion of the Fed balance shiit. 0.02$