Financial Sense Blog

When QE2 turns QEBlue

A look at the insignificant impact QE2 is likely to make

Will QE2 substantially stimulate economic growth and reduce the unemployment rate? The evidence is stacked against it.

What’s Missing Here? Feedback Welcomed

Have recent economic developments in the US changed the outlook for inflation/deflation? Listen to this new idea from weekly columnist Dock David Treece and weigh-in with a response.

Keep Your Head Above Dollar

There has been so much discussion recently about "QE 2" that you would think the entire financial sector were about to embark on a transatlantic cruise. Unfortunately, they, and we, are not so lucky. In the year 2010, "QE 2" doesn't refer to a sumptuous ocean liner, but a second, more extravagant round of "quantitative easing" - stimulus. In the past, this technique was simply called "printing money."

Quantitative Easing and Asset Price Inflation

Primary Bond Dealers Have Global Footprint

A common misconception on Wall Street is that the goal of quantitative easing (QE) is to flood the banking system with additional reserves in the hope it will lower interest rates and spur traditional bank lending. In reality, QE has very little to do with traditional banks, or traditional bank lending. In fact, QE’s primary goal is not to lower interest rates. In order to make the best investment and asset allocation decisions possible, investors need to understand the Fed’s QE motives and objectives. They also need to understand how QE works in the real world and how the freshly printed money makes its way into a wide range of global asset markets.

Favorable 6-Month Seasonality Period Begins

Research published by Yale Hirsch in the Trader's Almanac shows that the market year is broken into two six-month seasonality periods. From May 1 through October 31 is seasonally unfavorable, and the market most often finishes lower than it was at the beginning of the period.

Guess What's Coming To Dinner: Inflation!

The Amphora Report

The surge in global food prices will soon arrive on the dinner table. However, to focus on the direct inflationary impact of higher food prices alone is to miss the bigger, far more inflationary picture implied by rising wage demands in developing countries. Beginning next year, consumers in most developed economies will discover to their surprise that “food” price inflation is creeping into an astonishingly wide variety of consumer goods.

Voodoo Psychology

A new book is out on conspiracy theory. The book is titled Voodoo Histories, by David Aaronovitch. Several years ago Aaronovitch was sent to Tunisia by the BBC to make a film, and he learned something surprising. While driving from Tunis to El-Jem, the film's producer told Aaronovitch how "the 1969 Apollo Moon landing had been faked by NASA and the American government." Aaronovitch was incredulous. Of course, there was no proof of this assertion. It was merely obvious, said the producer, that the moon footage was faked.

Repeated, Fraudulent Efforts to Control Silver Prices

What next?

Since we received reports from the CFTC that market players have made "repeated" and "fraudulent efforts to persuade and deviously control" silver prices, we have heard that HSBC Holdings Plc and JPMorgan Chase & Co. are facing an investor’s lawsuit of placing “spoof” trading orders to manipulate silver futures and options prices in violation of U.S. antitrust law.

Debt Bubbles and the Bull Market for Commodities

The “World’s Greatest Investment Event,” the 2010 New Orleans Investment Conference kicked off on Wednesday as gold and natural resources investors descended on the Crescent City for answers to today’s market questions. The list of speakers for this year’s conference reads like a who’s who of the natural resources and commodity world—Dr. Marc Faber, Newt Gingrich, Dennis Gartman, Dick Armey, Peter Schiff and others.

The One-Sided Compromise

Last weekend, the G-20 finance ministers met in South Korea to find areas of agreement in preparation for the main G-20 gathering in November. The Chinese rebuffed renewed American pleas for them to revalue their yuan.

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