Bernanke & QE3: Here’s What You Need to Know
- Posted on August 31, 2012 at 5:58pm by
Becket Adams
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Wikipedia
Chairman Ben Bernanke sent a clear message Friday that the Federal Reserve will do more to “help” the still-struggling U.S. economy. His remarks seemed to leave two questions: What exactly will the Fed do? And when?
It’s no longer a matter of “if.” It’s going to happen.
Echoing what the Fed said in a statement after its last policy meeting July 31-Aug. 1, the chairman said they would act further, as needed, to stimulate economic growth and job creation.
He called the weak job market “a grave concern” that causes “enormous suffering,” wastes talent and can inflict lasting damage on the economy. Bernanke also described the U.S. economy’s health as “far from satisfactory” and noted that the unemployment rate, now 8.3 percent, hasn’t declined since January.
He stopped short of committing the Fed to any specific move. But in his speech to an annual Fed conference in Jackson Hole, Wyo., Bernanke said that even with interest rates already at super-lows, the Fed should do more to “help” the economy.
“From our reading of the speech, it appears that Bernanke has given up on the idea of Congress stepping up and taking care of its business, which means he thinks the ‘fiscal cliff’ will remain an issue through the November election and likely right up to the end of the year,” writes Paul Vigna for the Wall Street Journal.
“The drag on the economy will only get worse the longer that hangs around, and that’s apparently unacceptable to the Fed chieftain,” Vigna adds.
Some economists predict the Fed will unveil a new plan as soon as its Sept. 12-13 meeting, possibly a third round of bond purchases meant to lower long-term interest rates and encourage more borrowing and spending (i.e. “quantitative easing,” or QE).
In two rounds of QE, the Fed bought more than $2 trillion of Treasury bonds and mortgage-backed securities. Many investors have been hoping for a third round — a QE3. Others expect something less dramatic: a plan to keep short-term rates near zero into 2015 unless the economy improves, perhaps followed by bond purchases later.
In his speech, Bernanke assessed the economy’s weaknesses, defended the steps the Fed has taken to date, and insisted it can do more.
Investors took time to digest Bernanke’s speech but in the end seemed pleased. After his remarks were released at 10 a.m. Eastern time, the Dow Jones industrial average shed some of its earlier gains. Then it rose more than 100 points. It closed up nearly 91 points, or 0.7 percent.
Bernanke acknowledged that the Fed is operating in essentially uncharted territory. Central banks can take “nontraditional” measures when they’ve run out of conventional ammunition. And under Bernanke the Fed has tried many.
Federal Reserve Chairman Ben Bernanke walks outside of the Jackson Hole Economic Symposium, Friday, Aug. 31, 2012, at Grand Teton National Park near Jackson Hole, Wyo. (AP Photo/Ted S. Warren)
It’s made its public communications more explicit. For example, it’s sought to embolden investors and businesses by saying short-term rates will stay low as long as the economy is weak. The Fed originally said it expected to keep rates “exceptionally low” through mid-2013. It extended that target to late 2014.
And besides embarking on two rounds on QE, the Fed has sold short-term Treasurys and replaced them with long-term Treasurys. That shift is intended to push long-term rates down further.
Bernanke argued Friday that collectively, such measures have succeeded. He cited research showing that two rounds of QE had created 2 million jobs and accelerated U.S. economic growth.
However, even if the Fed does act further, many analysts doubt it would make much difference. Interest rates, both short- and long-term, are near historic lows. Borrowing — for those who have the credit — has never been cheaper. Yet the economy remains in a rut.
Critics have also argued that besides escalating inflation later, the Fed’s easy-money policies could push individuals and institutions into riskier investments. That, in turn, could destabilize the financial system.
Bernanke conceded that nontraditional policies carry risks. But he argued that these risks are “manageable.”
A third round of quantitative easing “seems like a done deal, and the market is trading it that way. So the timing, while interesting, isn’t really very relevant beyond the whole trading-opportunity game,” Vigna notes
Follow Becket Adams (@BecketAdams) on Twitter
The Associated Press contributed to this report.
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Comments (92)
AJAYW
Posted on September 1, 2012 at 1:59amCan’t wait until Bernanke as* is fired
Report Post »TJeff1
Posted on September 3, 2012 at 12:19pmBut, But, But …Ajay,
Counterfeit economies require frequent injections of counterfeit money to remain fraudulently healthy.
It’s simple Kleptonomics 101 actually, it‘s all good until it isn’t ….and then there will be a lot of crying.
Report Post »soybomb315_II
Posted on September 1, 2012 at 12:16amDo you think you can fix the morals of a country whose currency is worthless? Think about it. What happens when people work for money they know in their heart is worthless – not good
Report Post »Sirfoldallot
Posted on September 1, 2012 at 1:00amBernanke & his boss Obama needs 2 be arrested.
Report Post »Sirfoldallot
Posted on September 1, 2012 at 1:03amGold shot up 2 day $30. Canadian bollar shot up 2 , good move , bright move.
Report Post »ConservativeMomofFour
Posted on September 1, 2012 at 3:18amHow does this create jobs and help our economy? I thought Obama said the economy was recovering. I mean if we are in recovery and he created all those jobs why do we need QE3? I seent it on the picture box right there in my living room. He created a bajillion jobs. He wouldn’t lie would he? QE1 AND QE2 didn’t create jobs or help the economy so why do it? I think Obama has a scorched earth policy, he figures what the hell he’s out in November, so print money one last time, that should bring about our financial collapse. Its the final plan he has already allowed our enemies in the gate and Russians off our coasts, Muslim Brotherhood in the Administration, allowed the Cartels to run our borders, closed border check points, supplied the Cartels with weapons, made agreements with Putin, Turned his back on Our allies and got into bed with our enemies, is dismantling our energy supply through regulation and is sending his thugs to regulate our Farmers and Our Ranchers so they can not supply us with food. etc. Obama with his chin high in the air, looking down his nose at all of us little people as Our nation suffers will finally be able to say “I BUILT THAT”
Report Post »Doris
Posted on September 1, 2012 at 3:06pmI guess that means more borrowing, more printing and also going into oil reserves. All of which dont do anything except shore up obama.oil reserves are for emergency. Probably never put it back.The govt doesnt pay back.We should be drilling like crazy.
Report Post »January24
Posted on September 2, 2012 at 7:15pmI’m glad that Bernanke is signaling that there will be yet ANOTHER round of totally ineffectual quantitative easing.
It means my gold will go up in value. As they say, “Keep stacking.”
Report Post »girlnurse
Posted on August 31, 2012 at 11:32pmObama stole money from us taxpayers and gave it to his friends at GE and Billions of OUR American tax dollars that we worked hard for went to China, Russia, Korea, and elsewhere!! DID ANYONE ASK YOU IF HE could spend our money that way?! Americans are NOT pis*** enough!
http://www.washingtontimes.com/news/2009/aug/06/stimulus-to-aid-foreign-battery-builders/
http://www.politico.com/news/stories/0310/33847.html
Other countries must LOVE this traitor!
Report Post »KIOTI-TEXAS
Posted on August 31, 2012 at 10:12pmI’M glad MITT ROMNEY, IS GOING TO FIRE YOU BERNANKE! You have GIVING MONEY TO EUROPE AND THEY PAY NO AMERICAN TAXES AT ALL……..So how do we get it back as TAX PAYER???? BAILED OUT BANKS AND STOCKS COMPANIES AND THEY ALL STOLE MONEY AND NO ONE HAS GONE TO JAIL…HOLDER CAN ONLY COME TO TEXAS AND SAY VOTER ID IS AGAINST THE LAW…SO THEY SUE,FIND SOME JUDGES IN WASHINGTON DC AND OVER TURN TEXAS LAW….STATES HAVE THE RIGHT TO DO WHAT THEY WANT,, NOT HUSSEIN OBAMA AND HOLDER….THE QUESTION IS HOW MUCH MONEY DID HUSSEIN AND HOLDER GET OUT OF THE BAILOUT MONEY…IT WAS ALL STOLE FROM TAX PAYERS….HUSSEIN,HOLDER AND BERNANKE….DID YOU STEAL FROM THE HAND THAT FEEDS YOU??THE TAX PAYERS, WE THE PEOPLE…HOLDER IS DIRT IN MY BOOK, HIS BROTHER HUSSEIN AND BERNANKE…
Report Post »wbalzley
Posted on September 1, 2012 at 3:10pmStop writing in ALL CAPS…its ok to capitalize ONE or TWO words, but nobody wants to read a long, winding rant written in ALL CAPS.
Report Post »HoratiusAtTheBridge
Posted on September 1, 2012 at 11:59pmThe flippin nation is collapsing & you whine about CAPS being typed on a website? Prioritize, brother. IF you have prepared by getting some food, a relocation plan if needed (don’t be in a city when the Grasshoppers run out of ant-provided food) – & also have gotten the means of protecting yourself & your family – that four-letter word: GUNS. All good on those? ‘K… whine ’bout whatever. If not, then I tell you that FOOD, LOCATION & DEFENSE – capitalized or not matter much more than do internet manners. The Ants are about to a place where their work can no longer feed the Grasshoppers in their huge & growing numbers. Said Grasshoppers will not work or educate themselves, but they will riot, burn, loot & kill to get what they believe that they are owed. Right and wrong do not matter. Race does not matter. We’re heading for another kind of Hunger Game.
Report Post »mash4077
Posted on August 31, 2012 at 9:09pmthe fed is controlled by the rothschild family,the Council on Foreign Relations,and george soros. old georgy is banking on us to seal our fate in november and vote his boy back in. either way, the damage most certainly been done.
Report Post »mash4077
Posted on August 31, 2012 at 9:00pmWe are going from a representative republic to the Weimar republic.Keep voting democrat american sheeple,keep voting democrat!
Report Post »Tree_Butcher
Posted on August 31, 2012 at 8:39pmMy reaction if I believed they were TRYING to fix the economy:
‘Aww, $#!T, ANOTHER ONE?!!! For the love of GOD, we can’t afford to pay for the last two, those didn’t do a thing but cost us both arms, both legs, and now they want our first born too? ‘
My reaction knowing that they are Quislings:
Report Post »‘How many of the sheep do they think they can fool with this whopper? Doubtless enough to try to get the Dear Leader elected again, then the sheep won’t be a factor anymore.’
OperationNorthwoods
Posted on August 31, 2012 at 7:43pmPrinting money hurts poor people and fixed income people the most because their spending power is decreased because they always get the money last. The banks get the money first and can capitalize on it before it is devalued. End The FED.
Report Post »RANGER1965
Posted on August 31, 2012 at 7:41pmThe worst thing that could happen to Obama right now is inflation. If inflation began to spiral up you would see massive price increases, a sluggish economy would become utterly stagnant, and there would of course be many many, unintended consequences.
Both the Obama administration and the Federal Reserve would have a black eye. Obama’s chances of being elected would diminsh rapidly, and the Federal Reserve’s efforts would be seen by everyone for what they were; utterly foolish.
QE (Qualitative Easing) is just a cute way of saying we are printing money and buying our own debt. It keeps inflation at bay, but also undermines the free market. It holds off the necessary recession and eventual healing of our capitol markets.
By artificially delaying this, the Federal Reserve is insuring a longer, deeper, and more painful period for America. There is no free lunch, and rather than face up to the problem and solve it, they are holding it off for political reasons.
I hope that if Mitt Romney wins he seriously considers using Ron Paul as an attack dog on the Fed, and gives him the power to limit theirs.
Report Post »resme
Posted on August 31, 2012 at 7:55pmInflation is the only way to pay out debt. It’s impossible to pay our 16tril debt and 200T unfunded liabilities. It’s coming and soon. It’s also impossible to grow your way out of the debt.
Report Post »MDDAWG
Posted on August 31, 2012 at 8:29pmVery well said, RangerP.
Report Post »Rothbardian_in_the_Cleve
Posted on September 1, 2012 at 9:06amWe are in a liquidity trap. Given that and with interest rates near zero the Fed is running out of tools. The only thing they have left is print. The irony is that the more they print the more confidence in the action wanes. It is the defector theory of Nash’s equilibrium game theory. Nobody wants to be the last one in. The more they print the more it looks like the end game the more players jump off.
This is what the death throes of central planning look like. Make no mistake though, the banking elite will be made whole before and will make out like bandits post crash by picking at the carcass.
Seriously though, look at the other stories on the Blaze. 400 replies to some jerk popping off on Twitter about sticking his junk in a pie. 40 replies to a story basically pointing out that we just entered the 4th quarter in a game to end life as we know it. It is so sad that the education system has robbed people of the knowledge to debate on matters that are so vitally important to their and their children’s future.
Report Post »auhunter
Posted on September 2, 2012 at 7:01pmYou’re right, how else could the Fed buy it’s own Bonds? Just shuffling money from one pocket to the other. With no change in the final outcome. As Einstein once said Insanity: doing the same thing over and over again and expecting different results.
Report Post »BIGWUN
Posted on August 31, 2012 at 7:25pmLet’s see here…
Gold in 1962 was about $35 per ounce. Gasoline was about $.31 per gallon. Those were the good old days.
Gold today is about $1700 per ounce. Gasoline is about $3.83 per gallon.
So, in 1962, an ounce of gold bought about 113 gallons of gasoline.
Today an ounce of gold buys about 444 gallons of gasoline or 393% more gasoline can be purchased today with the same ounce of gold.
Burning Question Please Help: Should one invest in gold or in fiat currency and am I missing a huge corollary investment opportunity here? Which company manufactures the printing presses for Ben and Bozo? Buy Calls.
Report Post »tk1955
Posted on August 31, 2012 at 11:55pmFor my money…I’m forgetting precious metals! When the end of days is upon us…. guns,ammo, food and other survival items will be the key…. IMHO…. the quantative easy will ultimately be the worlds downfall. The system is so fragile…one screw up and we sink in to the abyss…. sorry for doom and gloom.
Report Post »MDECKER
Posted on August 31, 2012 at 7:16pmWhat is, “a grave concern”, is what this puppet of this Marxist-Leninist President thinks can, “help”. I actually think that when Obama is voted out of Office this November, and he will be, he’s going to sabotage all sectors of our Country. When Romney and Ryan fix it all, the Progressives will suggest it was because of all the policies the previous administration put in place. Remmber, they blamed the Bush Administration for 911 but touted the economy the Clinton Administration left for Bush. They had it both ways, in their feable minds anyway.
Report Post »MrKnowItAll
Posted on August 31, 2012 at 7:14pmIf you have Gold or Silver. Please do not get ripped off by all these places that claim how much they pay. If you want to know what gold or silver is fetching. Just do a search on e bay. Here is a example….If silver is $30.00 a ounce. It will sell for between $33.00-$40.00 a ounce on e bay. You have to pay the e bay fees. BUT you WILL get what it is actually going for without getting ripped off by Pawn Shops and all the rest of the Scam Gold and Silver buyers. You NEVER need Goldline or anyone else.
Report Post »Individualism
Posted on August 31, 2012 at 7:14pmI am ready profit big off intrade on Obama win and QE 3 with hard metals, bonds and some stocks i won’t mention. another reason why i don’t care if Obama or Romney really wins is because i know the market.
Report Post »WindyDualism
Posted on September 1, 2012 at 4:19pmCool, make lots and find another venue for your rabid drivel.
Report Post »Verity58
Posted on August 31, 2012 at 7:13pmAnd the Zioinist plan for the destruction of America continues. It is funny how those Protocols of The Elders of Zion continue to provide context to the realtime world. Perhaps people will awaken prior to the Noahide Laws being enforced, I do have my doubts though.
Report Post »balrog25
Posted on August 31, 2012 at 7:09pmWhat a total idiot. Bless his heart.
Report Post »Tobytheone
Posted on August 31, 2012 at 6:41pmDid anyone notice what gold and silver did
Report Post »Darmok and Jalad at Tanagra
Posted on August 31, 2012 at 6:57pmForget gold and silver, the paper and ink industry just went through the roof. Ink, that’s where the money is.
Report Post »watersRpeople
Posted on August 31, 2012 at 6:32pmBen Bernanke is already has his pants on fire so he’s like [let's just keep printing]. I think he should keep printing too – there’s about five billion people who have to be shaken from the surface of the earth.
Report Post »The_Jerk
Posted on August 31, 2012 at 6:49pmThey want to destroy the currency. Do you think for a minute that they don’t as much as us? They know exactly what they are doing.
Report Post »watersRpeople
Posted on August 31, 2012 at 7:22pmI think they think they know what they are doing. This is fact, the devil, Satan likes keeping people around to try to build their Kingdom above God’s Kingdom. The truth of the matter is that Most people are not created in God’s image, and they are completely useless.
Report Post »Micmac
Posted on August 31, 2012 at 6:17pmAll QE does is put more money in the system, eroding the dollar’s value and increasing the cost of goods like food and gas. There is already more money out there than there ever was. It’s not that we need more money, just better regulations to allow the investment of this money so it can go to work. NoBama has done nothing but create regulations likd Dodd-Franks which stops the flow of investment money. No on QE3.
NoBama > MoBama
Report Post »Darmok and Jalad at Tanagra
Posted on August 31, 2012 at 6:33pmThe problem is when velocity cranks up, inflation will go through the roof, it’s like putting water in a dam with the floodgates and pipes closed. Fill it to the brim, and then open the floodgates, bad things happen if your downstream. And everyone is downstream.
Report Post »afishfarted
Posted on August 31, 2012 at 6:40pmMICMAC, you’re right. The price of gold shot up 37 bucks BECUASE of the devaluation of the dollar. Obie’s plan is working. He’s been a very successful president. He’s fundamentally transformed America in 3 short years,, and he’s had a lot of help from the feds.
Report Post »This does NOT exonerate Bush’s statement “ We have to suspend the free enterprisein order ot save it”. But Obie and his socialist minions have really put the peddle to the medal
The_Jerk
Posted on August 31, 2012 at 6:42pmTime to try a non-Jewish fed chair.
Report Post »Individualism
Posted on August 31, 2012 at 7:33pmhow about getting rid of the fed or allowing currency competition, religion is the reason for big goverment and keynsian economics jesus was a socialist apparently.
Report Post »WindyDualism
Posted on September 1, 2012 at 8:18pmJerk
Report Post »there you go, couldn’t help yourself. how about policy instead? you don’t like 0 because he is black right? racist. what a pos you can be. had to bring being jewish into it to validate your puny existance. sicko.
Darmok and Jalad at Tanagra
Posted on August 31, 2012 at 6:17pmInstead of printing more money, lets just save the cost in paper and ink, and buy all those Euros off the EU, we can buy them by the ton, and save all that printing money expense. And the good news, it will be worth the same as our dollar after QE3. Plus they are sooooo pretty, with all the colors and pictures.
Report Post »booger71
Posted on August 31, 2012 at 6:17pmHe called the weak job market “a grave concern” that causes “enormous suffering,” wastes talent and can inflict lasting damage on the economy. Bernanke also described the U.S. economy’s health as “far from satisfactory” and noted that the unemployment rate, now 8.3 percent, hasn’t declined since January.
Report Post »==============
I say the Fed is the root of the problem
resme
Posted on August 31, 2012 at 6:15pmEnd the fed!
Report Post »oldasdirt
Posted on August 31, 2012 at 6:30pmPlease end the FED!
Report Post »Individualism
Posted on August 31, 2012 at 7:34pmlet us use any currency we want with an ex murder cop arresting us for it.
Report Post »Snowleopard {gallery of cat folks}
Posted on August 31, 2012 at 6:14pmThe systematic destabalization of the system is what they now want; along with that of the ‘fiscal cliff’ and the debt ceiling battle soon to happen. This now is more about the pending defeat of Obama in November, where he can ensure the damage set to occur with QE3 becomes crippling in the following ways:
Have the Senate pass any and all UN treaties that will hamstring the nations economy.
Begin massive ‘bailouts’ (i.e. Nationalizing) all other industries as he has proclaimed the desire to do.
Declare that the national debt will no longer be honored.
This will be the setup for a economic scorched earth that will leave the nation in utter devastation for Romney to deal with. Either that, or there will be enough chaos caused for Obama to come down hard with an iron fist and establish his dictatorship.
Report Post »Exrepublisheep
Posted on August 31, 2012 at 6:29pmWhere will you go if Obama wins? What will you do if Obama loses and there is no Dictatorship? Will you even be the least embarrassed over the “chicken little” effect you kept trying to start?
Report Post »Darmok and Jalad at Tanagra
Posted on August 31, 2012 at 6:48pmExrepublisheep
Report Post »We are all going to come and live with you. I get dibs on the couch and TV Remote.
quiltgal
Posted on September 1, 2012 at 10:23amRemember how Clinton’s staff trashed the White House on their way out? Like you, I believe an Obama defeat could bring on similar departing acts of destruction, but they may be of a more significant nature than simply gluing shut desk drawers, stealing door knobs, and removing the “W”s from keyboards. There’s no question in my mind that vindictiveness, both petty and more self-serving, runs through the veins of Obama’s administration, but its desire to bring down our economy for ideological purposes is more intense. Undoing the affects of a pre-election QE3 would be very difficult, but there are ways to nullify other destructive departing acts you mention. If an amendment did away with slavery, an amendment could also do away with noxious treaties. Obama could also be put on trial, declared a traitor, and his executive orders nullified.
Report Post »LOJ
Posted on August 31, 2012 at 6:11pmFire Bernanke, he is going to collapse us..destroying the Dollar and putting us in more Debt!
Report Post »watersRpeople
Posted on August 31, 2012 at 6:21pmYes, you got a problem with that money worshiper? What do you think it means when God busts up the fountains of the deep? Everything you cling to for meat will be utterly crushed: football, all sports, movies, religion, money, silver, gold – God is gonna trash every damned bit of it. God’s gonna send you spinning out of control in a flood when he breaks down the dam wall.
Report Post »watersRpeople
Posted on August 31, 2012 at 6:35pmI can tell by your comment that you’ll be one thrown on the lake of fire…enjoy.
Report Post »WindyDualism
Posted on September 1, 2012 at 4:25pmWateronthebrain
Report Post »Is your God providing your internet service and computer or is it magic beans? Why rant and rave in a manner that only makes sense to yourselves?
watersRpeople
Posted on August 31, 2012 at 6:06pmGet your tossing fingers ready to flip your gold and silver in the street. But I‘m sure there will be a Leprechaun Mormon running to peck like a crow at it’s shininess.
Report Post »watersRpeople
Posted on August 31, 2012 at 6:04pmYes, Americans made a big mistake when they crapped on God.
Report Post »