FED to taper QE?

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FED to taper QE?

Postby Pixel8r » Thu Aug 29, 2013 6:21 am » Safari 6.0.5 Safari 6.0.5  Mac OS X Mac OS X  Screen Resolution: 1680 x 1050 1680 x 1050

The FED has been talking about how it is going to start to taper it's QE for a while now, most financial analysts think that it is going to happen in September. I have noticed that many goldbugs don't think it is going to happen.

I feel that they will taper in September mainly to save face with the rest of the world's central banks. As they need to buy more treasuries to keep rates low I am expecting they will;

  • Stop buying $40b of MBS each month
  • Increase the buying of Treasuries from $45b to $70b per month

By doing this they will both taper their total QE amount from $85b to $70b and will also increase their monetisation of the governments debt and keeping rates low.
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Re: FED to taper QE?

Postby Pixel8r » Thu Aug 29, 2013 7:38 am » Safari 6.0.5 Safari 6.0.5  Mac OS X Mac OS X  Screen Resolution: 1920 x 1200 1920 x 1200

If they do the above what is it going to do to the gold price? Probably have an initial reaction down as the headline will be sold as tapering the total amount of QE, but soon recover as people realise that more government debt is being monetised each month.
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Re: FED to taper QE?

Postby Pixel8r » Tue Sep 17, 2013 8:20 am » Safari 6.0.5 Safari 6.0.5  Mac OS X Mac OS X  Screen Resolution: 1920 x 1200 1920 x 1200

Well we should finally find out what the fed is going to do today or tomorrow. Following recent events I am now starting to think that maybe there could be no taper happening, following the revision down of the employment data and the smash in PM's last week. Maybe they will still do a small token amount, but whatever happens has already been overpriced in to the PM's IMO.

Anyone else got any comment on this thread?
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Re: FED to taper QE?

Postby triple-agent » Tue Sep 17, 2013 11:33 am » Firefox 23.0 Firefox 23.0  Windows XP Windows XP  Screen Resolution: 1024 x 600 1024 x 600

Pixel8r » Tue Sep 17, 2013 8:20 am wrote:Well we should finally find out what the fed is going to do today or tomorrow. Following recent events I am now starting to think that maybe there could be no taper happening, following the revision down of the employment data and the smash in PM's last week. Maybe they will still do a small token amount, but whatever happens has already been overpriced in to the PM's IMO.

Anyone else got any comment on this thread?


tapering is a dead cert i reckon

in the long term it will be meaningless as it can be scaled at a rate of non-effectiveness

its all political, grandstanding maneuvering - hey look at us we want a strong dollar yada yada

edit - http://www.321gold.com/editorials/thoms ... 91713.html
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Re: FED to taper QE?

Postby Pixel8r » Tue Sep 17, 2013 6:37 pm » Safari 6.0.5 Safari 6.0.5  Mac OS X Mac OS X  Screen Resolution: 1680 x 1050 1680 x 1050

The Fed's Double-Bind

The Fed will blow up the economy if it continues money-pumping, but it will choke off the fragile recovery if it cuts back its money-pumping.

The Federal Reserve is in a classic double-bind: as its policies to boost growth bear fruit, interest rates rise, threatening the very recovery the Fed has lavished trillions of dollars of quantitative easing (QE) to generate.

Higher growth naturally leads to higher interest rates, which then choke off growth.

The Fed's goal was a self-sustaining recovery, in which growth reaches "escape velocity," i.e. is strong enough to support higher interest rates...
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Re: FED to taper QE?

Postby Pixel8r » Tue Sep 24, 2013 6:55 pm » Safari 6.0.5 Safari 6.0.5  Mac OS X Mac OS X  Screen Resolution: 1680 x 1050 1680 x 1050

I have been wondering to myself why the fed went down the route of threatening to taper for months? They must have realised that there was no way that they could actually do it and the threat would push up rates.

The only reason I have been able to come up with is to drive down bullion prices to enable the TBTF banks to rob money and to scare people back into fiat. If so it is obviously a very desperate action and show the real strain they are under currently.

All they have done is increase the debt load still further. Anyone have any reason why they just subjected the market to growth killing higher rates? :?:
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Re: FED to taper QE?

Postby Pixel8r » Mon Nov 04, 2013 10:01 am » Safari 6.1 Safari 6.1  Mac OS X Mac OS X  Screen Resolution: 1920 x 1200 1920 x 1200

So the market is back on believing the happy talk from the fed and thinking that we will get a tapering of QE in December. I wonder how many times they will be fooled again. Fool me once, shame on you; fool me twice, shame on me. IMO the market is about to be shamed into accepting reality.

The main fed's main problem is they are battling deflation, QE is the current tool for attacking it and It is becoming less and less effectual each time they use it. The fact that inflation in the US is still below their 2% target means they will be needing to do more to raise inflation, there is even talk of them trying to get it up to 6%.

The other problem for the fed I see is that they need to fund the massive debt that the government is making. Following the recent debt ceiling shenanigans the US gov no longer has a limit to the amount of debt they can sell, they just have a date of 15/01/14. That means that they will be spending like mad up before that date and the fed will need to be buying it.

I say that the amount of QE increases on December 18th and cause the message to finally sink in, the QE is the market without it the "recovery" collapses into deflationary hell.

QE ∞

Anyone else have any thoughts on this? :think:
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Re: FED to taper QE?

Postby Homer » Mon Nov 04, 2013 5:55 pm » Google Chrome 23.0.127 Google Chrome 23.0.127  Windows Seven Windows Seven  Screen Resolution: 1280 x 800 1280 x 800

Why do they have a debt ceiling ? I don't know of any other country that has one. Here In the UK our Government can borrow up to any amount that that the market will allow, And then when the market has had enough the BoE can carry on printing and buying uk any Gilts,
The main fed's main problem is they are battling deflation, QE is the current tool for attacking it and It is becoming less and less effectual each time they use it. The fact that inflation in the US is still below their 2% target means they will be needing to do more to raise inflation, there is even talk of them trying to get it up to 6%


Am I right?? At 7% prices will double every 7 years ? Or something like that ? I'm sure that I read that somewhere once.

I do agree what without more QE the "recovery" will fall flat on its feet, The same as here and In euro-land.
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Re: FED to taper QE?

Postby Stun Lee and Win » Tue Nov 05, 2013 8:05 am » Google Chrome 30.0.159 Google Chrome 30.0.159  Windows Seven 64 bits Windows Seven 64 bits  Screen Resolution: 1920 x 1080 1920 x 1080

Homer wrote:Why do they have a debt ceiling ?

Am I right?? At 7% prices will double every 7 years ? Or something like that ? I'm sure that I read that somewhere once.


I think there might have once been some quaint idea that politicians shouldn't be able to permanently indebt and damage the long-term future of the country merely for short term gains. How anachronistic!

http://en.wikipedia.org/wiki/Rule_of_72

Pixel8r » Mon Nov 04, 2013 11:01 am wrote:So the market is back on believing the happy talk from the fed and thinking that we will get a tapering of QE in December. I wonder how many times they will be fooled again.
Anyone else have any thoughts on this? :think:


Well yes, it should now be obvious to anyone of reasonable intelligence that QE cannot ever be stopped. Unfortunately the financial markets collectively are at a level of dribbling imbecility and have the memory of a goldfish. The majority of participants have not even recognised the metals manipulation yet. I reckon that the Fed might be able to get away with it for at least another 5 or 6 times.
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Re: FED to taper QE?

Postby Pixel8r » Tue Nov 05, 2013 9:28 am » Safari 6.1 Safari 6.1  Mac OS X Mac OS X  Screen Resolution: 1920 x 1200 1920 x 1200

Stun Lee and Win » Tue Nov 05, 2013 9:05 am wrote:Well yes, it should now be obvious to anyone of reasonable intelligence that QE cannot ever be stopped. Unfortunately the financial markets collectively are at a level of dribbling imbecility and have the memory of a goldfish. The majority of participants have not even recognised the metals manipulation yet. I reckon that the Fed might be able to get away with it for at least another 5 or 6 times.

I am starting to think that maybe the market actually isn't being fooled, but is actually just accepting the fact that the fed is the only game in town and just taking their share of the QE money. I guess this will go on until the currency market loses faith in the dollar, which means there is an almighty crash building up.

So really it all comes down to when China has got enough gold and decides to pull the pin. That article on Africa I posted in the gold thread is interesting.
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Re: FED to taper QE?

Postby warpig » Tue Nov 05, 2013 11:55 am » Google Chrome 30.0.159 Google Chrome 30.0.159  Windows Seven 64 bits Windows Seven 64 bits  Screen Resolution: 1680 x 1050 1680 x 1050

I was watching a Jim Rickards video last night and he explicitly said China won't pull the pin (slight paraphrase!), as it would effectively crash the market and it would be synonymous with shooting yourself in the foot. There is some logic to this, it would overwhelm the market much like the access over night spot market and these overwhelming sell orders. He went on to say, they [will|have] however [stop|stopped] buying new issuance from the FED and start diversifying. Sounds reasonable to me. So extrapolating this idea further, the FED have to create the dollar crisis on their own it would seem.

Pixel8r » 05 Nov 2013 09:28 wrote:So really it all comes down to when China has got enough gold and decides to pull the pin. That article on Africa I posted in the gold thread is interesting.
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Re: FED to taper QE?

Postby Pixel8r » Tue Nov 05, 2013 12:46 pm » Safari 6.1 Safari 6.1  Mac OS X Mac OS X  Screen Resolution: 1920 x 1200 1920 x 1200

warpig » Tue Nov 05, 2013 12:55 pm wrote:I was watching a Jim Rickards video last night and he explicitly said China won't pull the pin (slight paraphrase!), as it would effectively crash the market and it would be synonymous with shooting yourself in the foot. There is some logic to this, it would overwhelm the market much like the access over night spot market and these overwhelming sell orders. He went on to say, they [will|have] however [stop|stopped] buying new issuance from the FED and start diversifying. Sounds reasonable to me. So extrapolating this idea further, the FED have to create the dollar crisis on their own it would seem.

So the US will destroy the dollar on their own by QE ∞ to fund their own debt. In the meantime china will carry on buying gold and the yuan will takeover as the reserve currency.

A gradual death for the dollar which will speed up as they need to monetize more and more debt.
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Re: FED to taper QE?

Postby Stun Lee and Win » Tue Nov 05, 2013 1:46 pm » Google Chrome 30.0.159 Google Chrome 30.0.159  Windows Seven 64 bits Windows Seven 64 bits  Screen Resolution: 1920 x 1080 1920 x 1080

Pixel8r » Tue Nov 05, 2013 10:28 am wrote:I am starting to think that maybe the market actually isn't being fooled, but is actually just accepting the fact that the fed is the only game in town and just taking their share of the QE money. I guess this will go on until the currency market loses faith in the dollar, which means there is an almighty crash building up.


Agree with this, the Fed is the only game in town and can do whatever it wants. We are all centrally planned communists now. There is an almighty crash building up at some time in the next twenty to thirty years.

warpig wrote:I was watching a Jim Rickards video last night and he explicitly said China won't pull the pin (slight paraphrase!), as it would effectively crash the market and it would be synonymous with shooting yourself in the foot.


Yes, agree with this too. The current situation is suiting the Chinese just swimmingly, and the Western leaders are so stupid that they don't realise what is going on.
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Re: FED to taper QE?

Postby warpig » Tue Nov 05, 2013 2:36 pm » Google Chrome 30.0.159 Google Chrome 30.0.159  Windows Seven 64 bits Windows Seven 64 bits  Screen Resolution: 1680 x 1050 1680 x 1050

They were certainly too stupid when they outsourced manufacturing to China! Now I'm not too sure, I think they might just be trapped by their own greed and the mindless decisions they made 10+ years ago. It will end in a bang that's for certain...

The further in to this crisis we get and the less responsive gold is given the resounding fundamentals for it, I'm lending more of an ear to Martin Armstrong, just to hear his opinions. After all he was the only one who called the top of the gold market as far as I can tell. However... this was his response on his blog, seems relevant to the discussion... 2032 seems a long way off.

ANSWER: Capital is shifting and China will become the financial capital of the world. But that is not likely until after 2032.


http://armstrongeconomics.com/armstrong_economics_blog

Stun Lee and Win » 05 Nov 2013 13:46 wrote:Yes, agree with this too. The current situation is suiting the Chinese just swimmingly, and the Western leaders are so stupid that they don't realise what is going on.
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Re: FED to taper QE?

Postby Pixel8r » Wed Nov 20, 2013 7:34 pm » Safari 6.0.5 Safari 6.0.5  Mac OS X Mac OS X  Screen Resolution: 1680 x 1050 1680 x 1050

So taper is back on according to the latest FOMC minutes. I don't get this seems like an oxymoron, how can they keep rates low and taper their bond buying? What trick could they possibly have up their sleeve or are they just again tricking the market, kicking the can down the road and driving gold prices temporally lower again.

Can you imagine what will happen if they do taper, rates shooting up and stock market crashing from height... There is no way this is going to happen.

Back to my original question on this thread what are they achieving from this taper talk other than controlling the gold price? Other than that the only thing it appears to do is raise UST rates. Maybe the gold price is a lot more important to them than they let on.

Fed Chief Hints at Prolonged Low Rates

Federal Reserve Chairman Ben Bernanke said Tuesday that short-term interest rates may stay near zero "well after" the jobless rate falls below 6.5%, the latest effort by the central bank to assure markets that rates will remain low even as it contemplates pulling back on its $85 billion-a-month bond-buying program.

Since last year, the Fed has been saying that it won't raise rates until after the unemployment rate—which was 7.3% in October—falls to 6.5% or lower, as long as inflation remains below 2.5%.

In a copy of remarks prepared for delivery at the National Economists Club annual dinner in Washington, Mr. Bernanke said that "even after unemployment drops below 6.5%, the [Fed] can be patient in seeking assurance that the labor market is sufficiently strong before considering any increase in its target for the federal funds rate."...
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Re: FED to taper QE?

Postby Stun Lee and Win » Wed Nov 20, 2013 10:41 pm » Google Chrome 31.0.165 Google Chrome 31.0.165  Windows Seven 64 bits Windows Seven 64 bits  Screen Resolution: 1366 x 768 1366 x 768

Stun Lee and Win » Tue Nov 05, 2013 9:05 am wrote: I reckon that the Fed might be able to get away with it for at least another 5 or 6 times.


Well, they will only be able to fool the financial genii in the market for another 4 or 5 times now. Then they will need to think of a new name for "tapering" which will confuse the market for the next year to eighteen months. I am being serious here.
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Re: FED to taper QE?

Postby Pixel8r » Thu Nov 21, 2013 9:29 am » Safari 6.1 Safari 6.1  Mac OS X Mac OS X  Screen Resolution: 1920 x 1200 1920 x 1200

How much longer can they have their cake and eat it, they are saying they are going to taper and keep rates low… It can't possibly be both can it?
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Re: FED to taper QE?

Postby Laura » Thu Nov 21, 2013 10:51 am » Safari 4.0 Safari 4.0  Linux Linux  Screen Resolution: 800 x 506 800 x 506

With 'markets' being at least in part, nothing but an obedient machine, is it hubris to talk as though one runs the show?
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Re: FED to taper QE?

Postby Pixel8r » Thu Nov 21, 2013 12:06 pm » Safari 6.1 Safari 6.1  Mac OS X Mac OS X  Screen Resolution: 1920 x 1200 1920 x 1200

Laura » Thu Nov 21, 2013 10:51 am wrote:With 'markets' being at least in part, nothing but an obedient machine, is it hubris to talk as though one runs the show?

My thinking is that markets go where the biggest profit is. Currently they known that the fed will keep printing money and is staying in the stock market because that is where the money that they are printing is going currently.

I am just trying to work out why they are doing this taper talk, all it appears to do is to raise rates and beat gold down. So the taper talk actually costs the government more, due to the yield going up and reduces the value of all the UST the fed holds. Both of which are negative to the fed, so I am left with the only reason they are doing it is to reduce the gold price. That doesn't seem right to me, unless things are worse than we know. :think:
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Re: FED to taper QE?

Postby Stun Lee and Win » Thu Nov 21, 2013 12:59 pm » Google Chrome 31.0.165 Google Chrome 31.0.165  Windows Seven 64 bits Windows Seven 64 bits  Screen Resolution: 1366 x 768 1366 x 768

Laura » Thu Nov 21, 2013 11:51 am wrote:With 'markets' being at least in part, nothing but an obedient machine,


Exactly.

Pixel8r wrote:I am just trying to work out why they are doing this taper talk, all it appears to do is to raise rates and beat gold down.


They are doing it so that they keep credibility. If they just said straight up that they would never end the money printing then that would cause a panic. Saying that they are just about to taper means that market participants think that they are still serious about eventually ending and selling back the QE. It is all about management of perception. Gold prices going down is a key part of the management of perception for the hard of thinking market participants. Gold price going down equals "deflation" about! Can't start tapering quite yet! Crack-up boom averted for the short term. Bank of England does the same thing with interest rate rises always being six months away.
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