Yet another data point to tick in the "go go QE3" column.
3rd Quarter GDP is announcing this Thursday. If this comes in below the projected 2.8%, that would be a huge tick in the column.
Bernanke is giving a press conference November 2nd at around 2:15 EST.
Main point to this information is to note that the actual QE programs achieve the following:
1. Typically it is a "stealth bailout". This time, it's looking like toxic mortgage backed securities currently on bank balance sheets are once again going to be targeted, and paid at a significant premium up to and including "par" value (ie., an assumption of zero impairment).
2. Typically it results in a large increase in the supply of money, which is a straight devaluation of the currency.
3. Large increases in the supply of money tend to correlate strongly with positive stock price movements in the denominated currency, in this case, a weaker dollar is positive for domestic stocks. This is yet another "stealth bailout" of a market that, even though it's overvalued 25% relative to the historical mean (http://www.multpl.com/
), is in "need" of about a 120 point (9.75%) boost on the S&P in order to lock in bonuses for the Wall Streeters.
1. Inflation in the stuff you need.
2. Flat nominal/negative real inflation in the stuff you own.
It's a pretty straightforward wealth transfer on a massive scale, completely under the noses of most people, that has far, far outdone the $700 billion bailout of October 2008. http://www.shadowstats.com/alternate_data/inflation-charts
Real inflation, compared to the inflation standard advocated and successfully implemented by our good friend Newt Gingrich, commonly known as the hamburger/steak substitution method (ie., once steak gets expensive, people buy hamburger instead, and that is somehow justification for muting the actual price inflation of steak. Pretty stupid, right?). This was implemented in order to screw social security recipients, as the CPI measure was used to determine COLA (cost of living adjustment), ie., the annual increase in social security payments so that the retired folks don't become destitute as a result of inflation.