Feel Relieved? QE3 to The Rescue

Posted by Jeff Carter
on September 13th, 2012

The Fed was pretty predictable. They will continue the failed Operation Twist, and engage in more failure utilizing QE3.

In defense of the Federal Reserve, there is a limited amount of policy decisions they have at their disposal to influence economic events. The heavy lifting needs to come from the fiscal policy applied. Currently, the only good, market based ideas are coming out of the Republican party, and the Democrats are killing them in the Senate and White House.

Ironically, it’s not just about tax cuts.

There are a lot of other ideas that have been floated that don’t involve new uses of government programs. Democrats have killed everyone. We could have created a few jobs with the Keystone Pipeline. Obama killed it.

We could be exploring for more oil, mining coal, getting more natural gas. The Dept of Energy, EPA and the Democrats killed it.

Our banks could be lending to small businesses, creating velocity of money and turning it over through the economy. Dodd-Frank and the Democrats killed that.

The initial market moves are higher. It’s another sugar high. Most of the experienced traders on my Stocktwits stream are waiting. They think this could be one of the great sales of all time.

This is just kicking the can down the road until the economy improves. What it isn’t is thoughtful leadership from the Federal Reserve. Japan has done Quantitative Ease and it hasn’t worked. Truthfully, nothing will work until we get the correct fiscal policy in place. Lackluster Federal Reserve policy combined with a Keynesian economic fiscal policy is a recipe for failure, and ultimate disaster.

Maybe we need two empty chairs. One for Obama, and one for Bernanke.

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