Qe3 Will Drive The Price Of Pm Up Either Way !

I believe that the debt ceiling will NOT be raised and the Fed will be forced to print money to cover the debt by debasing the currency. I believe we are on the cusp of monumental historical events that will fundamentally change the monetary systems of the world. There will be a push for a single worldwide currency but the Greek experience has opened many eyes to the dangers of inflexibilty in your currency. In the end a single currency will be thwarted but it will be a long,rough, painful process getting there.

"If they increase the debt limit, they buy time."

Like getting a credit card with a nice FREE APR for the first year and a 10 grand spending limit. Max that puppy out and at that years end of FREE APR, bounce it to your new credit card (for a couple of hundred more), which has a 15 grand limit. And now your ready to start spending again, yeah....

Come on USA, raise the limit and lets spend

I agree with the previous post on this. QE3 and the debt ceiling are not the same things. It is possible to have both, one or the other, or neither. Like most financial issues, though, they are related. Raising the debt limit, for example, DOES impact the dollar because it shows that the US is not well managed financially and has to keep borrowing to keep going. More money WILL be printed and spent when the debt ceiling is raised, further reducing the value of the US dollar.

The dollar is a symbol of our country and its strength. If we demonstrate financial incompetence, which we are doing, then the dollar will fall. People holding dollars will look for other places to put that money so that they can get a better yield or so that they are protected from monetary inflation. Sometimes, they choose other currencies for this. Sometimes, they choose bonds. At other times, they choose PMs. In a lot of cases, it is not that the alternative is so attractive, it is that the dollar is just so ugly!

As to QEx... I would be very interested in knowing why Bernanke is so enamored with doing this. Neither of the previous 2 QEs seem to have worked. When something is not working, a reasonable person quits doing it. Other than massively increasing the US debt, what exactly are the QEs doing for us? Or, is it more a matter of what they are doing TO us? :-/

The idea of the initial QE program was to "add liquidity to the market". The thieves on Wall Street and in the banks had apparently absconded with it all and new funds were needed... or so they say. OK, we had QE1 and are now awash in cheap money... but the unemployment rate is now higher than it was before QE1 was initiated. Clearly, adding jobs was not the reason for QE1.

OK, then it was to increase the access to credit. But the banks are awash in money now and are not loaning much of it to potential borrowers. Adding more money via another QE program will not help this issue because all QE does is increase liquidity and we are not lacking liquidity now.

They say that to a man with a hammer, everything looks like a nail. Could it be that Bernanke's hammer is QE and that therefore ALL US monetary and financial problems are nails?

QE2 was designed to drive investors out of bonds and into stocks.By debasing the dollar our exports rose and corporate profits with it. TPTB are convinced that if they can keep stocks climbing,they can convince the American people that the economy is improving and we can all start spending again just like old times. It was,is,and always will be a charade trying to hide the magnitude of the problems we face. QE3 will kick in and debase the currency further to pay off the debt more cheaply. That is the only way to avoid default shortly down the road,we cannot do it reasonably with just spending cuts just like Greece,Italy,Ireland et al can't. If the debt ceiling is not raised,there are even fewer options because I don't see how QE3 could be implemented if there is no "expansion room" afforded the Fed. So,things look good for PM's no matter which way the debt ceiling issue falls.

True... and it isn't as if various governments around the world haven't tried this. They have and they all failed miserably. All this can do is enlarge the problem and delay the day of reckoning for a time. This question has been asked AND answered. There is NO reason to repeat the test.



I think that we can safely assume that Bernanke knows exactly what he is doing. Stupid people do not get Ph.D. degrees from prestigious schools, don't get to teach at Ivy League universities, and don't get appointed to lead the Fed.

OK, that disposed with, let's now move on to why Bernanke is doing this. My thought is that he is well aware that the only thing that can save the US from a complete crash is to get the economy growing and producing again... and growing smartly, too. A goal of 5-6% growth per year would not be unreasonable. His problem, though, is that we now have an administration that favors idiotic policies that do not favor growth in the US economy. Therefore, Bernanke must be using all of his considerable powers as Fed chief to delay the day of reckoning and allow a new administration to come in and get this economy moving again. He is buying time and he is using the printing presses to do it because that is all he has that can do it. I believe that whether or not this will work depends completely on what happens in 2012-2014.



If so, Hock, then that seems to have worked. In fact, the US government is having a very hard time selling bonds right now. PIMCO won't have anything to do with US Treasury bonds and they are one of the biggest bond investors in the world. Foreigners are backing away from US bonds because of the dollar and debt problems we now have. The Fed is buying most of the new bonds that are coming out so that the extent of the market failure of these securities is made less obvious. I understand that a lot of people confuse the US economy and US stock market and think that when the stock market is doing well, all is fine with the economy. Tain't necessarily so, as my Grand Pap would have said.



Right on, Fred... and that is exactly what I expect them to do. The balance sheets of Freddie and Fannie must look absolutely abysmal. Any change there is likely to be a significant improvement. Shuffling them onto the Fed's balance sheet will make them look better but the Fed will then need some plan for flushing that toxic financial waste somewhere. They can't hold it forever. Or can they?

They don't need to hold it "forever", just "indefinitely".

A judo person told me you have to be able to kick above your head. No, I only have to be able to kick above your head.

The other part of the equation. When the polio vaccine saved one in 1000, it would have been worth $1000 a shot. It's hardly worth a million $ to save one life every 10,000 years.