Once they Fed's inflation target is exceeded they should not continue QE. Until then I think you will see them continue. If they continue QE after the inflation target is exceeded, that is a very bad sign indeed. I disagree with your last comment (the last sentence.) In my opinion the "current economic model", as you call it, very much requires government intervention. The approach being taken is Keynesian, and as far as I'm concerned seems to be working, albeit slowly. There are clearly limits to what the Fed can do. Congress has to be on the same page to achieve the best result.
The nice folks at Edelweiss Holdings have perhaps jumped the gun a bit. It is not necessarily monetizing, not yet anyway. See for example: http://en.wikipedia.org/wiki/Quantitative_easing from which I have lifted this section on "Printing Money." "Printing money Quantitative easing has been nicknamed "printing money" by some members of the media,[84][85][86] central bankers,[87] and financial analysts.[88][89] However, central banks state that the use of the newly created money is different in QE. With QE, the newly created money is used for buying government bonds or other financial assets, whereas the term printing money usually implies that the newly minted money is used to directly finance government deficits or pay off government debt (also known as monetizing the government debt).[84] Central banks in most developed nations (e.g., UK, US, Japan, and EU) are forbidden by law to buy government debt directly from the government and must instead buy it from the secondary market.[83][90] This two-step process, where the government sells bonds to private entities which the central bank then buys, has been called "monetizing the debt" by many analysts.[83] The distinguishing characteristic between QE and monetizing debt is that with QE, the central bank is creating money to stimulate the economy, not to finance government spending. Also, the central bank has the stated intention of reversing the QE when the economy has recovered (by selling the government bonds and other financial assets back into the market).[84] The only effective way to determine whether a central bank has monetized debt is to compare its performance relative to its stated objectives. Many central banks have adopted an inflation target. It is likely that a central bank is monetizing the debt if it continues to buy government debt when inflation is above target, and the government has problems with debt-financing.[83] [underlining is mine]
Just so I can clearly understand what you are claiming, you are saying it is not monetizing because inflation is not officially above the Federal Reserve's target? Is this your whole point? Because you know the whole "two step process" as you note above is rather silly. In order to gain access to the discount window and become a "Primary Dealer", these big banks must agree to buy a portion of government debt. So drawing a distinction on paper where none exists in reality is rather silly.
At the moment, I'm not claiming anything in particular. I'm just quoting something I thought you might find interesting, and I'm saying it may be too soon to judge how much monetization will come out of the QE operations the Fed has been doing. I'm basing my remarks on what I read in Wiki. What are you basing yours on? Your comment re the two-step process got me thinking about it. It seems to me there is a very good reason for it, and for not permitting Central banks to buy debt directly from the Treasury. But that's a subject for another time.
I'm basing my remarks on what the Federal Reserve said it will buy. As for whether it is "printing money", I give you John Stewart (no idea why the video is flipped horizontally) <iframe width="560" height="315" src="http://www.youtube.com/embed/S0WV9YPjW7w" frameborder="0" allowfullscreen></iframe> It makes no difference. By requiring banks to purchase debt, and then lending to them for free to buy that debt back, the banks have no choice but to serve as middle man. To say it is not printing money because you forced the intermediary to play along is absurd. You Keynesian magicians can hide behind semantics all you want, but the end result is the same. We are monetizing the debt, clear as day.
+100 That clip is funny as hell , I forwarded it to friends, family and colleagues several months ago.
So....given your lack of rebuttal, do we agree? The Fed is printing money? Or are you going to offer some flimsy wikipedia definition or website or what not that tries to gloss over the issue?
We don't know the amount of net "printing" yet. We should wait and see by how much the balance sheet shrinks later on. Not only does the Fed buy bonds, they also sell them. What is most important is the relative value of the dollar vis-a-vis our trading partners' currencies. At the moment the dollar is appreciating in buying power relative to a basket of our trading partners currencies. So far the Fed is at the top of their game. Let's withhold judgement and try to avoid jumping to conclusions.