All safety is relative. Anyway, even though the article is not support for QE, it does say, ""He also said the U.S. economy would have no growth without central bank action. "It's pretty clear that the Bank of Japan, Bank of England, the ECB and the Federal Reserve have expanded their balance sheets by approximately 3.5 percent of GDP per year for the last four years - and if it weren't for that, you'd have negative GDP."
Speaking of Japan, check out this from January: http://www.nytimes.com/2013/01/12/b...llion-for-urgent-economic-stimulus.html?_r=1&
Apart from the irrelevant first sentence, nothing about the rest of that is false. Nor is it support for QE. He is right, that all of those economies would have no "growth" if it weren't for central banks. If central banks let the economy alone to correct itself, we'd have negative periods of GDP, and then a cleansing of all the dead weight and the economy would be free to expand on it's own, sans all the overhanging debt burden. Instead, we'll continue trying to kick the can until it all comes crashing down around our heads. At that point we'll have negative GDP far worse, AND will have inflated our currency away. We'll have no emergency steps to take then, because we will have exhausted it all. Remember, math doesn't care. And despite all these trillions, Euro GDP is negative and ours is barely positive as of the last reading. Gundlach gets this. You don't seem to, though.
Yep. I hope I'm mistaken, but someday I think you'll see a similar stupid move by our central bank of idiots.
Buying long-term bonds today is very foolish. More likely he is unloading them, and pulling the old"Goldman Sach's" routine.
Tsing Tao. I have to respectfully disagree. We do not know the amount of printing at this point. It is incorrect to assume ahead of the completion of the QE operation how much net "printing" there will be. The expansion of the money base that accompanies the intial phase of the QE operation does not necessarily all end up as inflation and monetizing, because in the second phase of the operation the Fed will shrink its balance sheet and the money base will contract some. The money base of any country is never stagnant anyway. What is ultimately of interest is how much debt will end up being effectively monetized through inflation. We are never going to do the kind of "printing" that a country like Zimbabwe might do, where new money is created and used directly to pay debt. That's illegal in the U.S. Secondly only a fool would guarantee the course the Fed has embarked on will work out well. I am only insisting that it is the right path to follow now, compared to the alternative path some of you want the Fed to follow. Those that want the Government to sharply curtail spending right now are wrong. I am convinced that the Keynesian approach that the Fed, Treasury, and administration have embarked on is the correct approach to bring the country out of recession, and I am optimistic that it will work if only those idiots who insist on following failed economic theory don't stand in the way. But will I guarantee that it will work? Of course not. I've made it very clear that in my opinion the economic policies followed during the Reagan and Bush years were damaging to the country. (Thatcher Also did this with equally bad results.) These folks followed a misguided "supply side/ deregulation" approach to management of the economy. The success of deregulation requires equilibrium theory to hold true. Sadly for both the U.S. and Great Britain, equilibrium theory is wrong!!! I do not know at this point how well the Fed policies will work in the end, and I certainly do not know if in the future, when it comes time to raise tax rates and interest or cut spending, the Congress will cooperate. But I do know this: equilibrium theory has been proven wrong, the supply siders have been proven wrong, and the de-regulators have been proven wrong. The Keynesians have not been proven wrong, not yet anyway.
So you're saying he, Jeffrey Gundlach, was lying about buying "more long-term Treasuries in the last month" than in the last four years?
Hard to say for certain. Figuring out the liars from the straight-shooters is the trick, although sometimes it is obvious. Anyway, the Fed has distorted both the bond and equity markets, and there will be hell to pay, we just don't know when, imo.
"I am only insisting that it is the right path to follow now, compared to the alternative path some of you want the Fed to follow." That sounds like relative safety to me. Without looking up the strict definition of "equilibrium", couldn't I say that the equilibrium theorists are correct, but that no one is willing to endure the volatility of "letting Nature run its course"?