Has the Fed realized QE isn't working?

[ajcrshr]

The Fed’s secret QE equivalent

"Why on earth would the Fed be choosing to soak up excess reserves at a time when the panic in the markets has reached highs not seen since 2008, and at a time when most of the market is calling for more liquidity and quantitative easing?

Well, we would argue it’s because the Fed believs the financial system may have crashed through a critically important juncture. Actually perhaps a rabbit hole or a looking glass are more accurate.

QE is no longer the cure. It has now become a poison."


http://ftalphaville.ft.com/blog/2011/08/12/652166/the-feds-secret-qe-equivalent/

 

[jem]

thanks

 

[Martinghoul]

They're barking up completely the wrong tree...

 

[StarDust9182]

In my view, it has never ever been about getting the correct answer. They don't really want to know the downside of their strategies.

 

[ProfitMagnet]

Quote from StarDust9182:

In my view, it has never ever been about getting the correct answer. They don't really want to know the downside of their strategies.

These are people who have outperformed their competitors to get to where they are now. They cannot face the fact that their suggestions may have a downside.

 

[JamesVU2000]

They should have never ever been allowed to take the risks they are taking. Not seeing or even believing a crisis of this magnitude was possible should have been a huge warning flag that they dont have any idea what they are doing. Their tools don't work. If they are wrong society will get the downside and uncle ben will go back to some institution somewhere with no permanent loss.

The US has created a horribly risky system where individuals dont have downside, but society does. Eventually the whole thing will blow up. Its still in the process of doing so

 

[CaptainObvious]

Actually it's working perfectly. Free money to keep the casino open.

 

[denner]

Quote from JamesVU2000:

They should have never ever been allowed to take the risks they are taking. Not seeing or even believing a crisis of this magnitude was possible should have been a huge warning flag that they dont have any idea what they are doing. Their tools don't work. If they are wrong society will get the downside and uncle ben will go back to some institution somewhere with no permanent loss.

The US has created a horribly risky system where individuals dont have downside, but society does. Eventually the whole thing will blow up. Its still in the process of doing so

Exactly right. You were one of the few who knew the score back in 2007-08.

 

[jem]

Quote from Martinghoul:

They're barking up completely the wrong tree...

I disagree.

The fed has been desperately trying to inflate residential and commercial real estate assets in order to try and save most of their member owners. The fed was wiling to debase the dollar to any extent.

I think right about now... they realize they are going to have let a few go... because they are debasing the dollar but not getting much in return. They have been pushing on a string.

Absent serious wage inflation you can't make residential real estate rise in an when borrowers have to qualify for their loans.

The problem with commerical real estate is that prices were driven up by the silly money easy capital era. Few sane people or institutions will lend money even at currently well reduced prices. The cap rates still suck in most places.

 

[JamesVU2000]

They didn't understand the dangers of debt. And still don't.