Use access key #2 to skip to page content.

kdakota630 (29.80)

Peter Schiff - Twist Paves the Way for QE III

Recs

15

September 27, 2011 – Comments (1)

Earlier this week the Federal Reserve ignited a firestorm in the global markets by admitting that the U.S. economy is facing significant downside risks. Although it continues to sugar coat the unpleasant reality, never has such a stunningly obvious statement resulted is so much turmoil.

Once again we are seeing the knee-jerk market reaction to seek refuge in the perceived safety of the U.S. dollar and U.S. Treasuries. However I expect investors will soon discover that such assets are firmly in the eye of the storm.  As the tempest moves on, those enjoying the dollar’s current stability may soon find themselves battered by a category five monster.

Market disappointment was compounded when the Fed failed to follow up its dire outlook with a new round of quantitative easing (QE). Instead, through a policy entitled “Operation Twist” the Fed promised to sell $400 billion of short-term Treasuries and use the proceeds to buy an equivalent amount of long-term Treasuries. The markets evidently perceived this “balance sheet neutral” policy as too timid.

From my perspective, the Twist really amounts to another Fed “Hail Mary” pass that will fall short of the end zone. But, by putting the squeeze on banks and further restricting credit availability to small business the move will likely do more harm than good.

Full article

1 Comments – Post Your Own

#1) On September 27, 2011 at 1:45 PM, kdakota630 (29.80) wrote:

State of the Gold Market - Sept. 26, 2011

Report this comment

Featured Broker Partners


Advertisement