FOMC Fed Meeting: More QE?

Modern-day meeting of the Federal Open Market Committee at the Eccles Building, Washington, D.C. (Photo credit: Wikipedia)

Be prepared for the next great transfer of wealth. Buy physical silver and storable food. These days, it’s not so much as what the Federal Reserve does, or what it says, that impacts market behavior—it’s largely what people, especially large and institutional investors, think it’s going to do. (See the WealthCycles.com article Fed to Utilize Power of Words for more on this. Right now, big investors are betting big on the Fed’s undertaking a third round of quantitative easing, or QE3, as reported by Financial Times earlier this week. So does that mean this is what the FT wants its readers to believe?

From the WealthCycles.com article, Round 2 of Quantitative Easing:

The process of quantitative easing is fairly simple—it involves printing currency and buying assets from banks—but it can take many different forms. Central banks can use Q.E. to buy “relatively safe” treasury securities, pumping cash into their vaults to stimulate lending; or they can buy assets that have lost value (think mortgage-backed securities) in order to make banks whole and attempt to shore up their balance sheets. Central banks can also target certain maturities of the assets they purchase, to push down the cost of short-term, medium-term, or long-term borrowing... Continue to read.

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