Log In | Become a Member | Contact Us


Market Intelligence for the Printing Industry

Connect on Twitter | Facebook | LinkedIn

Featured:     M&A Trends     Production Inkjet     Installations and Placements Tracker

Data Analysis

The Fed Never Really Stopped QE3

By Dr. Joe Webb
Published: April 14, 2016

 

 

This week’s chart shows the aggressive actions of the Federal Reserve after the housing bubble. For decades, the Fed’s balance sheet increased by about 6% per year, averaging about half inflation and half economic growth. The rocket-like rise when the bubble burst is clear, and then the three steps up of each of the quantitative easings are plainly seen. The Fed has wanted to raise rates for some time, but they have also wanted to stop the buying of government instruments that characterized the QE programs. They create shortages of publicly traded bonds which increases their prices, which makes the effective interest rates low. Rather than ending their purchases, the Fed has been replacing matured obligations. In effect, this keeps QE3 going. Can the Fed ever end it? They may hold on and hope that over time that economic growth and inflation catches up to them in time, but that can take forever, or perhaps longer. It will be difficult for the Fed to end its policy without robust economic growth that will give them the flexibility and opportunities to unwind their holdings. Should a recession begin, or a new financial crisis emerge (even an internationally) the Fed might need to create an additional QE effort.

 

Recent Data Analysis

 





Become a Member

Join the thousands of printing executives who are already part of the WhatTheyThink Community.

Copyright © 2018 WhatTheyThink. All Rights Reserved