QE is over....what happens now?

[JustRalph]

http://www.theblaze.com/stories/2014/10/29/quantitative-easing-is-over-for-now-take-a-look-at-how-many-trillions-of-dollars-it-cost/

Quantitative Easing ends.......what now?

[RunForTheRoses]

Interest Rates through the roof?

[TBD]

Inflation.

[fast4522]

Would be interesting to see what the housing market does first. Too soon to tell with much of what we see tied to the world, with everyone else in the dumper that effect has eased things here in the United States. There is an increasing number of people at Sams club who have cut the cord and only do the internet in free areas. I know of one guy who says that he has rabbit ears and gets crystal clear local HD TV and no bill. Price creep for food has been with us for years with the price going north and the number of ounces going south. The housing market and cable company's might be the initial barometers.

[Robert Goren]

The Fed haters will predict disaster Interest rates may increase a quarter to half point in the next few months, but not more. Not much else. The economy will continue to purr along.

[Tom]

That's not the purr of the economy, it is the hum of the life support system it is on.

[classhandicapper]

Last I checked there was about 3 trillion dollars of excess reserves parked at the Fed because of all the money that has printed over the last few years. Theoretically all that money could get levered up into the economy and cause runaway inflation.

For now, the Fed is paying a small rate of interest on the money to keep banks from doing that. (So basically we bailed them out by buying bad assets from them and now we are paying them interest on the bail out money :bang: )

The Fed has said it will reverse the process over the long haul. So there is no need not to worry about the excess money. The problem is there is no example of that ever actually occurring in the history of mankind that I am aware of.

In the end, the process almost certainly created distortions in various financial markets and among asset prices that will have to be unwound. When it happens, everyone will get blamed except the Fed and it will print even more money and help screw us up even worse long term.

[JustRalph]

That's not the purr of the economy, it is the hum of the life support system it is on.

that hum is also the exasperation of 600k people who dropped out of the work force. Some say it's as high as 1.5 million if you count part timers......

Obama Admin likes to just ignore that fact

[jwb]

The Fed haters will predict disaster Interest rates may increase a quarter to half point in the next few months, but not more. Not much else. The economy will continue to purr along.

Fed haters? Do you know anything about the Fed, or central banking for that matter? Who do you think the Fed reports to? Who owns the Fed?

I predict a bank holiday in the not too distant future....

[reckless]

Fed haters? Do you know anything about the Fed, or central banking for that matter? Who do you think the Fed reports to? Who owns the Fed? I predict a bank holiday in the not too distant future....

jwb, I do not know who directly owns the Federal Reserve Bank. I do know it is not the U.S. Government and its citizens!

Would you hazard a guess?

This could become a very interesting topic, for sure.

[jwb]

jwb, I do not know who directly owns the Federal Reserve Bank. I do know it is not the U.S. Government and its citizens!

Would you hazard a guess?

This could become a very interesting topic, for sure.

Reckless, I think that is THE question... we don't know, and won't ever...
I could hazard a guess on a few, however, per their site "It is not "owned" by anyone and is not a private, profit-making institution.". The Creature from Jekyll Island is a worth while read in an attempt to understand this truly mysterious "entity".

[Robert Goren]

Fed haters? Do you know anything about the Fed, or central banking for that matter? Who do you think the Fed reports to? Who owns the Fed?

I predict a bank holiday in the not too distant future....The Fed gives reports to congress every so often. The members are appointed by the president and approved by congress. During their term, they do as they damned well please. Nobody owns the Fed. There are no shortage of people who do not agree with what the Fed does, no matter what they do. There are a few who would like to do away with it. An Act of Congress could do it. Ron Paul is perhaps the best known of the people wishing to get rid of the Fed.
Some banks will close for Veterans Day. Almost all will close for Thanksgiving, Christmas, and New Years Day. But that is not what I assume you are writing about. I think you are writing about something similar to what happened in 1933 when FDR declared one. It is highly unlikely there will be a "bank holiday" of that nature anytime soon. The only reason I could see one being declared is if the Federal Reserve System and the large banks were hacked and major damage was done.

[Robert Goren]

Reckless, I think that is THE question... we don't know, and won't ever...
I could hazard a guess on a few, however, per their site "It is not "owned" by anyone and is not a private, profit-making institution.". The Creature from Jekyll Island is a worth while read in an attempt to understand this truly mysterious "entity".The Fed is a government agency. It was created by congress in 1913. Congress could ended it.
http://en.wikipedia.org/wiki/Federal_Reserve_System

[_______]

QE is over in the U.S. but an easy money policy is not. And QE isn't over in Europe and Japan.

I would expect continued strength in the dollar. I would expect rates to remain low. I would expect more differentiation in equities now that all boats aren't benefitting from a rising tide.

Those forecasting runaway inflation see a different economy than I do. Deflation remains the bigger worry.

Overall, the well telegraphed end of QE is a big "meh" as was intended.

[Robert Goren]

QE is over in the U.S. but an easy money policy is not. And QE isn't over in Europe and Japan.

I would expect continued strength in the dollar. I would expect rates to remain low. I would expect more differentiation in equities now that all boats aren't benefitting from a rising tide.

Those forecasting runaway inflation see a different economy than I do. Deflation remains the bigger worry.

Overall, the well telegraphed end of QE is a big "meh" as was intended. I agree with you that deflation is bigger worry than runaway inflation right now. But I doubt that it will happen either.

[thaskalos]

The Fed is a government agency. It was created by congress in 1913. Congress could ended it.
http://en.wikipedia.org/wiki/Federal_Reserve_System
Did the government create the Fed...or did the Fed create the government?

[ReplayRandall]

QE is over, so what's next?

Maybe making a habit of watching the following once a week from the IMF, might help give us some clues:

http://www.imf.org/external/np/fin/data/rms_five.aspx/

[jwb]

The Fed gives reports to congress every so often. The members are appointed by the president and approved by congress. During their term, they do as they damned well please. Nobody owns the Fed. There are no shortage of people who do not agree with what the Fed does, no matter what they do. There are a few who would like to do away with it. An Act of Congress could do it. Ron Paul is perhaps the best known of the people wishing to get rid of the Fed.
Some banks will close for Veterans Day. Almost all will close for Thanksgiving, Christmas, and New Years Day. But that is not what I assume you are writing about. I think you are writing about something similar to what happened in 1933 when FDR declared one. It is highly unlikely there will be a "bank holiday" of that nature anytime soon. The only reason I could see one being declared is if the Federal Reserve System and the large banks were hacked and major damage was done.

Do you honestly believe "Nobody owns the FED"?

Those "appointed" ... like Jamie "no conflict of interest" Dimon?

Ron Paul has been demanding for years that the FED be audited... falling on deaf, ignorant ears. The only thing saving the FED and the dollar is its petro status (continuous wars don't hurt either).... but nothing could ever change that, right? :rolleyes: The BRICS nations love being controlled & sanctioned, as well converting their currency to dollars to purchase manipulated commodities.

Yes, a bank holiday similar to Cyprus (2013)... or that little "soiree" Biden eluded to....

"At a fundraiser for Democrats in Pennsylvania Monday night, Vice President Biden revealed that the incoming Obama administration toyed with declaring a bank holiday on Jan. 21, the day after inauguration."... could never happen. Besides are economy is "humming" and big banks are in much better shape then in 2009.

[Clocker]

that hum is also the exasperation of 600k people who dropped out of the work force. Some say it's as high as 1.5 million if you count part timers......


Actually, that hum is the purr of contentment of people who have dropped out of the labor force to escape job lock, and are pursuing their passions, becoming photographers and writers and musicians.

[Clocker]

jwb, I do not know who directly owns the Federal Reserve Bank. I do know it is not the U.S. Government and its citizens!

Would you hazard a guess?

This could become a very interesting topic, for sure.

On paper, the banks that belong to the Federal Reserve System (usually any bank with the word "national" in its name) own the Fed. Actually, the ownership shares can't be bought and sold, pay no dividends, and have no voting power. The Fed sets its own policy, subject to audit by the GAO and "regulatory oversight" by Congress. Congress has the power to change its operating authority, but I assume most in Congress would be clueless about how or why to do that. The Fed is self-supported by profits on its security trading, and profits above and beyond its expenses are given to the US Treasury. In 2010, the Fed made $82 billion, and gave $79 billion of that to the Treasury.

[JustRalph]

I agree with you that deflation is bigger worry than runaway inflation right now. But I doubt that it will happen either.

have you been to a grocery store lately? How about buying for a Restaurant?

Food Costs are over the moon..............

Electronics are sneaking up. More to come...........the only thing going down is gas.........and that's because they are trying to kill fracking.

[whodoyoulike]

... The Fed sets its own policy, subject to audit by the GAO and "regulatory oversight" by Congress. Congress has the power to change its operating authority, but I assume most in Congress would be clueless about how or why to do that. The Fed is self-supported by profits on its security trading, and profits above and beyond its expenses are given to the US Treasury. In 2010, the Fed made $82 billion, and gave $79 billion of that to the Treasury.

What happened to the other $3 billion? Was it audited and reported? How often is the Fed audited? How can I get some?

[Clocker]

What happened to the other $3 billion?

Operating expenses. Last I saw, their annual payroll was about $1.5 billion.

[RunForTheRoses]

Alan Greenspan says to buy Gold...

http://www.economicpolicyjournal.com/2014/10/hot-alan-greenspan-says-buy-gold.html

http://online.wsj.com/articles/former-fed-chief-greenspan-worried-about-future-of-monetary-policy-1414597627

[fast4522]

The Fed haters will predict disaster Interest rates may increase a quarter to half point in the next few months, but not more. Not much else. The economy will continue to purr along.

RG to be fair to this post I would add I heard the economy grew @ 3.2 % last quarter, the other side of that coin is the jobs created are low paying. JR is quite correct about the cost of food though. Two kinds of folks out touch are the ones who have servants buy and cook their food, and the people who fill out a card for lunch and dinner in assisted living. Both types are quite able to make shit up on the fly minus not caring about the truth.