Fed Chair Introduces New Quantitative Easing - Can It Succeed?

By: Ian Campbell | Fri, Sep 14, 2012
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By the time you read this you will have been over-exposed to the news that yesterday Fed Chair Bernanke announced further U.S. 'quantitative easing' without a stated end-date. Mr. Bernanke announced the U.S. Federal reserve will purchase up to U.S.$40 billion of mortgage-backed securities each and every month until it saw 'a sustained upturn in the weak U.S. jobs market'.

Say what you will, from my perspective for any such a plan to succeed:

Following from introduction of this new quantitative easing, the Fed has reduced its expectation of year-end 2014 unemployment to (at the mid-points) 7.0% from the 7.35% estimate it made in June. Consider:

After considering the foregoing, I suggest you:

For me any prediction for a specific U.S. economic statistic forecast today for December 2014 invokes a vision of a man pulling his car over to the side of the road, unzipping his fly, and facing squarely into the 'proverbial breeze' as he goes about his business.

Topical Reference: Fed bets big in new push to rescue economy, from Reuters, Pedro da Costa and Allister Bull, September 13, 2012 - reading time 4 minutes, thinking time longer.



Ian Campbell

Author: Ian Campbell

Ian R. Campbell, FCA, FCBV
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Through the Economic Straight Talk Newsletter Ian R. Campbell shares his perspective on the world economy, the financial markets, and natural resources. A recognized business valuation authority, he founded Toronto based Campbell Valuation Partners (1976), Stock Research Portal (2007) a source of resource companies market data and analytic tools, and Economic Straight Talk (2012). The CICBV* annually funds business valuation research in his name**. Contact him at icampbell@srddi.com.
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