In a bold move Fed Chair Bernanke anounced an aggressive round of quantitative easing people are calling QE3.  First this is a stimulus and with a GOPTEA House the only stimulus and the way it’s structured it could be a substantial stimulus.  Make no mistake the QE measures in the past did as much to help the economy from going over the brink as the stimulus. `In fact in combination with low interest rates the quantitative easing by the Fed was probably the only thing that helped ease the foreclosure crisis.

Beyond that this quantitative easing is bold and unique. `For the fist time the Fed has left QE3 open ended. `Usually the Fed announces a specific amount it would spend to by things like mortgage securities. While the scope of QE3 is not as high in the beginning, the Fed will buy about $40 billion or so mortgage securities a month, obviously since it’s open ended it could help the economy greatly. The Fed agreed to purchase securities until the unemployment rate gets down to 7% or inflation goes over 3%. Bernanke also announced they will keep any adjustments to the discount rate to between 0-1/4% until the middle of 2015.

The short term political effects will be that QE3 has already caused the DJIA to go up over 200 points.  Whether it helps the unemployment rate in the short term remains to be seen but at least it gives business the security to consider adding new hires.

The long term implications should be much more promising for whoever is the next president.  Like I have predicted for a while the next four years will be a huge boon in economic growth no matter who is president because business just cannot sit on all those cash profits forever.  The Fed move almost assures they must hire because it ends big businesses’ and finance’s last bogus reason to slow hiring and lending, economic insecurity.  Since QE3 only ends with a positive result businesses will be compelled to meet those goals sooner or later.  The bottom line is Bernanke  who is one of the renouned experts in how to deal with depresive forces has just given American business and finance a security blanket instead of a short sheet.

To read more about QE3 click the following link.

Of course idiotic Republicans in the article are denouncing QE3 because it will help the economy.  One was such a hypocrite they said QE3 was a result of Obama’s failures even though it’s the GOPTEA House that is blocking all jobs bills.  I am sure the Nostradumbarses Libertarian types who have been predicting hyperinflation with every QE even though it cannot happen in times of low demand will squawk the loudest.

“There is no clearer indication than today’s Fed action that after 3 ½ years, the president’s economic policies continue to fail,” said Rep. Jeb Hensarling (R-TX), chair of the House GOP conference, in an official statement. “At a time of negative real interest rates and trillions in excess reserves, there is little which monetary policy can achieve today to promote economic growth and much the Fed risks by today’s announcement…. There are limits to what monetary policy can achieve, and it’s clear the Fed has reached them.”

Needless to say Democratic response was more positive.

“The Fed is fulfilling its obligation to take action to address unemployment,” said Sen. Chuck Schumer (D-NY). “Now congressional Republicans need to fulfill theirs.”


Leave a Comment

Please Login to comment
5 Comment threads
10 Thread replies
Most reacted comment
Hottest comment thread
7 Comment authors
choiceladyNirekOlderandwiser55KQµårk 死神funksands Recent comment authors
newest oldest most voted
Notify of

Is this just another bailout for banks? I have a better way to help everyone. Instead of helping the banks help the home owners by giving them x number of dollars to pay their mortgages. That helps those home owners and the banks because the banks get their payments.

Of course everyone would say that is wrong to help home owners like that. I look at the big picture and think that if they had done it my way the first time we would not have had to do two more QE’s.

Trickle up instead of trickle down. That is my opinion.
What say you?


Nirek – it might help to know that thanks to provisions in the Dodd-Frank legislation, the governmental regulatory mechanisms are now once again capable of dismantling the utterly irresponsible financial institutions. Lehmann is the prime candidate. It is being systematically taken apart to pay back those who lost money. Dodd Frank gives FDIC the capacity to go beyond just protecting deposits to actually killing irresponsible financial institutions where they need to die.

As KQ noted, there are various other provisions in mortgage policy and practice helping families. It has taken way too long to get this going because – like it or not – what happened on the banking and investment corporation side 2000-2008 was NOT ILLEGAL. Couple this with STATE banking and lending laws, the process of finding justice has had to wind its way through the courts, local federal court jurisdictions, and state legislatures to find resolution. At that, it’s not uniform since it depends in no small part upon the states.

I was with a group of intelligent people who asked why Obama did not nationalize the banks. Well – because a la Harry Truman trying to nationalize the steel companies in the 1950s, the Supreme Court said the presidential power is insufficient to do that. (It may trump Congress as well, though that was not ruled upon.) So we have already had a ruling in 1952 that presidential power does not go that far not EVEN under threats of national security.

It took quite some time for FDR to get his bank regulatory capacity to be both Constitutional and effective. Obama has been following something of the same trajectory – to be legal it had to have enabling legislation, and that is largely what Dodd Frank has done. It has restored much of the firewall Clinton overturned in ending the Glass-Steagall protections, it has empowered dismantling (close to nationalization but with critical differences that make it legal), and has numerous other aspect that, if the GOP were not standing in the way of financing and enforcing, would give us a totally sound economic and financial regulatory system once again. And with the state rulings such as the CA homeowners’ bill of rights, individuals now have serious protection in this state – with other states doing much the same. All of those, may I note, are largely “blue”. The “red” states? Not so much.

But this action by Bernanke is powerful, does not bailout banks, and makes for a profound jump start to the economy at the lower levels where smaller businesses have been unable to wrench capital from the big guys. When you cannot act via Congress, and when you cannot make the big guys do the right thing – by passing them and doing end runs is a powerful and useful social good. That’s what the Fed has done.


Excellent assessment. I believe the economy is poised for a strong recovery and the fed held off because the danger is an over-heated economy. I think that’s also why they didn’t give numbers but “as long as it takes”. They’re starting with a mortgage backed purchase program and will move from there, The FOMC vote was 11-1. If only congress could be so bi-partisan.

And my IRA looks pretty good. Makes me want to chant “Keep the Fed! 🙂


Congress has forced the Fed to act by abdicating their responsibility to make policy and pass policy to affect unemployment. The Fed and the President are forced to act with their limited tools because Congress is utterly broken.

For those that feel the Fed is acting outside its bounds, please refer to the Fed’s mission statement on it webpage:

The Federal Reserve System is the central bank of the United States. It was founded by Congress in 1913 to provide the nation with a safer, more flexible, and more stable monetary and financial system. Over the years, its role in banking and the economy has expanded.

Today, the Federal Reserve’s duties fall into four general areas:

1) Conducting the nation’s monetary policy by influencing the monetary and credit conditions in the economy in pursuit of > maximum employment,< stable prices, and moderate long-term interest rates

2) Supervising and regulating banking institutions to ensure the safety and soundness of the nation's banking and financial system and to protect the credit rights of consumers

3) Maintaining the stability of the financial system and containing systemic risk that may arise in financial markets

4) Providing financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation's payments system

It is their job to do SOMETHING about unemployment even if Congress won't. It is Congress' own INaction that is to blame for the Fed's actions, which do indeed have a negative side to its stimulative effect.


Bernanke and His Committee Take a New Course

Michael Woodford, a preeminent monetary theorist at Columbia University, has argued that more quantitative easing was likely to be ineffective — because Bernanke is acting too sporadically. What was needed, he said, was for the Fed to have an extended program of purchases tied to economic performance (watching inflation and unemployment primarily with GDP secondarily). This would shift expectations and bolster confidence about the future course of the economy.



First, the Fed will keep short-term interest rates low until mid-2015.
Second, the central bank will buy up $85 billion worth of assets each month between now and the end of the year.
But, unlike QE1 or QE2, this new round of purchases will be more open-ended.

“If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved.”
SO….The Fed is pumping equity back into the economy – something the record setting, profit makers and the banks should be doing but are not. I also think the timing reflects a belief by most of the Fed Board members that the current administration is the one they want to work with. A two month delay would not have mattered. Doing ti now is a big statement and the conservative backers are not happy. That in itself is a good sign.


A) Short term…The uncertainty that still surrounds health care, tax policy, debt management ALL await the election. Reelecting Obama is fine, but he needs a Democratic House and Senate to do what must be done.

B) Mid term….the fact that there are plenty of job openings in health care, in computer programming, in engineering, and plenty of college grads with degrees in art and journalism. We need technically trained college grads AND we need skilled labor that was once produced by the unions.


Murph, Bank of America came out today and basically said that the Fed is planning on “unlimited stimulus” through 2014 or whatever it takes.


What all of this boils down to, in terms of the partisan reactions to the QE3 (isn’t that the new British cruise ship?) is…it is viewed by both sides as helping the economy.

For Democrats, that’s a good thing. For Republicans, it is of course a bad thing. So Democrats applaud it and Republicans condemn it.

Pretty simple.

The GOP’s official policy is to ensure a poor economy. First, it allows them to kill and cut all the programs they’ve always want to kill and cut, including Social Security and Welfare. It helps lower wages and builds a greater gulf between the wealth and power of the top 1% and the shrinking wealth and power of the 99%. It helps insure partisan division and pitting Americans against each other. And most of all, it can be exploited and twisted to ironically blame on the Democratic President who has worked to improve the disastrous economy the GOP created and has protected from improvements.

There’s so much going on with the Presidential election, the unrest in Muslim countries, etc. but against this backdrop, what would seem to be explicit is that the Republican Party at this point in time appears as treasonous a major party as has ever been seen in our history.

The Republican Party has worked toward the ongoing destruction of the economy and the lives of Americans. They join hands with terrorists in attacking our nation’s leadership when America has suffered a political and brutal act of violence. They look gleeful when exploiting the deaths of American to advance their political campaigns. They intentionally distribute anti-American propaganda, accusing America’s President of being supportive of terrorists who harm innocent citizens.

The chatter now may be about how unprincipled Romney is but isn’t the true story that these latest events display how anti-American the far right in this country is?

Back to the QE3, this is a welcome development and a bit late if you ask me. The poor employment numbers have been coming in for around half a year but better late than never for this easing to be instituted by the Fed.

Sure is hard for Romney and the RW to have any authenticity when complaining about how bad things are when the market hits a new high, real estate prices are firming up and this latest move by the Fed stimulates economic growth.

That doesn’t mean they won’t keep lying like well worn rugs about how bad things are and how it’s all Obama’s fault but it’s hard to convince people of things despite the facts.