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QE3 decision today

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    QE3 decision today



    So what's everyones take on this. I know it's not clothing related but it has a chance to affect my clothing purchase options


    I'm hoping for it and gold prices to spike big time. Even though I'm Canadian it has a great impact on my investments.


    #2


    ??

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      #3


      http://www.washingtonpost.com/blogs/...p-the-economy/

      Ben

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        #4


        @bremersm - Fed decision is expected today: analysts expect the central bank to engage in a third round of “quantitative easing,” or QE3, to stimulate the economy.

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          #5


          Thanks for the article.


          My thoughts on this: It didn't really work the first two times so why are they trying it a third time. Seems interesting that they are doing this right before the election.


          Why not cut taxes and spending and let the citizens stimulate the economy?

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            #6


            I think we need some threads about sex and religion.

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              #7


              hah Mac that's why I was like hell I may as well post it. But it is a topic that will affect EVERYONE. Plus if gold spikes to $2000/oz I will probably be able to go to the tailor across the street and get some true bespoke suits


              regarding sex: Enjoy it most of the time, unless things get bent.


              Religion: That was the thing that made it ok to slaughter other people during the Crusades right?

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                #8


                Ron Paul!

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                  #9


                  I am no economist, but isn't this essentially a trade off between inflation and hoping that the banks (who seem to be doing quite well) will feel better about lending money into the economy in the future? Sounds like "trickle down" economics called by another name to me.


                  I'm guessing my burden will be greater, only through diminished purchasing power rather than increased taxes, right?

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                    #10


                    @ChrisW in other words robbing Peter to pay Paul.

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                      #11


                      Quantitative easing is not trickle down, not even close. It also has nothing to do with "robbing" anyone. The Fed literally creates money to buy up assets from the banks. This means that banks have excess cash to lend (at the lowest rates in history) which stimulates the economy. At least that's how it's supposed to work in theory.

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                        #12


                        @Josh won't this also increase inflanation? As there is more money printed the value is decreased.

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                          #13


                          Other than a very brief period in the late '80s/early '90s, American income tax rates are already the lowest they've been in modern history.





                          The idea that cutting taxes necessarily leads to economic growth is a trope that has already been soundly disproven under both Reagan and Bush Jr. The success of the economy is only marginally related to prevailing tax rates, at best. If anything it appears as though higher tax rates have tended to correlate with higher GDP growth.


                          As to the suggestion that the Fed may be acting to influence the election, that's pretty hard to believe. The Fed's current Board of Governors is made up of appointees from both Obama and Bush Jr, and confirmed by Congress. The Chairman, Ben Bernanke, was appointed by Bush Jr. The Fed is primarily accountable to the Government Accountability Office, which is an investigative agency controlled by (the currently bipartisan) Congress. Certainly, the Fed is not immune from making policy decisions with significant political implications. The notion that it is blatantly attempting to influence elections in favor of one candidate or the other, however, is rather far-fetched.

                          Ben

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                            #14


                            @bremersm: Most economists agree that QE1 prevented deflation, which would have been catastrophic. Quantitative easing is helpful when inflation is low and the Fed has run out of other options, but can't fix the economy on its own. Also, with inflation at historically low levels, I would advocate the same inflation rate that Reagan pursued in the late 80s, which was 4 percent.


                            I don't believe QE3 would be able to impact the economy over the next two months, so it won't really have an impact on the election. No matter who wins, I doubt Bernanke will be reappointed.


                            To answer your question about taxes, there are a few reasons why: 1)the Fed controls monetary policy, while Congress runs fiscal policy, so the Fed is doing what it can do - though I'm of the opinion they could do more; 2)federal income and FICA taxes and are at their lowest point in 60 years, so it's already been done, and 3) tax cuts have less of an impact than other fiscal measures when the Fed has reached the zero bound and can no longer lower interest rates.

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                              #15


                              I know it sounds crazy, but inflation needs to be higher in order to increase employment. By the way, we lost some $60 Trillion in asset worth during the meltdown in CDO/CDSs alone, so we could print like crazy and not dent the inflation rate. Note that inflation is NOT equivalent to the increase in commodity prices. Corn costs more this year because of drought, not the relative value of the dollar.

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