Blackrivered - I agree with your understanding. They are effectively printing money which has downward pressure on the USD and use those funds to buy US Treasuries which reduces the interest payable on the debt they have already accumulated. The reduction in the yields for US Treasuries creates a chase for yields in higher risk areas such as the DOW pushing the prices higher.
The problem is these effects are all articifically created and increase the overal money in the system so will eventually result in inflationary pressures, condsiderably so once the economy starts growing consistantly.
The problem is however that the only way to reduce this inflationary pressure is by beginning to wind back the QE, and every time there is even a sniff of this the market jumps ships. What happens when they actually start reducing QE? The economy slows and they are forced to continue down the same path or risk a triple dip recession like the UK.
- Forums
- Commodities
- GOLD
- "we will provide additional support.”’bernanke
"we will provide additional support.”’bernanke, page-16
-
- There are more pages in this discussion • 41 more messages in this thread...
You’re viewing a single post only. To view the entire thread just sign in or Join Now (FREE)
Featured News
Add GOLD (COMEX) to my watchlist
The Watchlist
CC9
CHARIOT CORPORATION LTD
MD - Shanthar Pathmanathan, Geologist - David Trabert
MD - Shanthar Pathmanathan
Geologist - David Trabert
SPONSORED BY The Market Online