iShares Silver Trust (SLV)

[The GidDy uP Kid]

Stealthy QE3

Wednesday March 07, 2012 16:10

Today, there are new reports that the Federal Reserve is planning to inject more cash into the ailing economy though another round of Quantitative Easing (QE3). You have read in these pages before that More QE is on the Way (1-22-13, The Gold Speculator). The new bond-buying program would be “sanitized” by coincident selling of short-term instruments in an effort to control increased inflation that would result from the addition of another $1 Trillion or so to the money supply. This approach is not new; the ECB has used large, “sanitized” bond purchases over the last year in its attempt to stimulate the Eurozone economy and provide bailout funds to ailing European banks.

The Fed bond-buying program would be the third attempt to jumpstart the US economy through aggressive monetary policy. The previous cash injections added $2.3 Trillion to the Fed’s balance sheet. The results of Fed stimulus efforts have been underwhelming. US unemployment has actually increased since QE1 was implemented in 2009 and the larger QE2 in 2010. Today, the US Labor Department, Bureau of Labor Statistics reports US unemployment at 15.1% (U-6), up from 14.1% in January 2009. And GDP continues to limp along at 1% to 3% since QE2 went into effect.

http://www.kitco.com/ind/Silva/20120307.html