Stealth quantitative easing (QE) four QE4 has now been officially announced by Fed Chair Jerome Powell in his recent FOMC policy meeting.
As Darren Winters explains, Quantitative tightening has officially ended, the Fed is now expected to resume its balance sheet expansion and in so doing the Fed’s great pivot from tightening to easing is now complete.
Fed Chair Jerome Powell described last week as an “organic” process rather than QE4, or the fourth round of QE.
But as the old saying goes, if it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck. So let’s not get bamboozled with different words. If the Fed is expanding its balance sheet then it is buying assets and pumping liquidity into the market. Sure, the Fed can call it whatever they like, Open Market Operations, Operation Twist, balance sheet expansion and whatever else but it is still the same old policy wrapped up in a different name.
Fed Chair Powell announced stealth QE, which he insisted was an “organic process rather than QE4” in a one-liner to the sheeple media
Fed chair Powell informed his audience that the difference this time is that the Fed is reacting to a recent credit crunch in the overnight repo market, which sent short term borrowing rates for bank’s surging.
Darren Winters suggests we just step back and mull over the situation. In the “greatest economy ever” somehow the banks don’t trust each other and are demanding higher interest rates to reflect the heightened risk. Meanwhile, the smart money is stockpiling cash and Capex spending has nosedived. But there is nothing to see here folks, we are not in a crisis because the Fed is rising to the challenge of yet another liquidity crisis, with an organic process.
Stealth quantitative easing rebranded as organic, in other words more electronic duck-tape, is keeping a broken system from breaking apart and melting down
Organic means not artificial, all-natural and good. So record low Fed fund rates and a bloated Fed balance sheet north of three trillion US dollars, which was once referred to as emergency monetary policy, then accommodative policy, because the former was too alarming, has now been rebranded as an organic process.
Is there anyone gullible enough left in the room that’ll believe stealth quantitative easing will work?
A gigantic debt time bomb is ticking. “The dollar is going to get killed. That’s where we are headed;” said Peter Schiff.
“When the Fed was doing QE3, they were buying $85 billion worth of debt per month. They (Fed) just did $176 billion in three weeks, and they say they are not doing QE…”, said Peter Schiff.
The Fed is monetizing more debt not doing QE than when they were doing QE, which means they are doing it and they are going to have to do more of it. But the Fed’s stealth quantitative easing could also weaken the US dollar, which is what the Fed might want.