ZeroHedge: The simple answer is the following: whether one wants to call it QE or not QE, ever since the Fed announced on Oct 11 that it would start purchasing $60 billion in T-Bills each month until “at least into the second quarter of 2020” – being careful to note that “these actions are purely technical measures to support the effective implementation of the FOMC’s monetary policy, and do not represent a change in the stance of monetary policy“, i.e., this is not QE, the Fed’s balance sheet has grown for 7 out of 8 weeks.
The market’s response? Just like during the POMO days of QE1, QE2, Operation Twist, and QE3, stocks have risen on every single week when the Fed’s balance sheet increased, following the three weeks of declines that led to the October 11 announcement.
What about the one week when the Fed’s balance sheet shrank? That was the only week in the past two months since the launch of “NOT QE” when the S&P dropped. Read more…
Opinion: The first time the Fed printed money to buy bonds from banks was 2009 when global stock markets were plummeting. The Fed went on to buy bonds in 2011 and 2013 in order to keep interest rates near zero.
This time stocks are setting new records daily. We are constantly told the economy is the strongest in history. And yet the Fed is printing money again, literally forcing stock prices up and bond yields down.
It does not make sense to commit economic suicide, and one day it will stop. A Politico headline from Sunday may have the answer:
Trillion-dollar deficits as far as the eye can see, and hardly a voice of caution to be heard
In the old days, a decade or so ago, Democrats would have assailed Donald Trump‘s failure on federal deficits; instead of eliminating it, as promised, the deficit has doubled to a trillion dollars as far as the eye can see.
Republicans would be in full fury over the spending schemes of Democratic presidential candidates; even the mainstream moderates propose huge increases for health care, education and the social safety net for the disadvantaged.
Yet deficits, as a political issue, are dead.
Prosperity is in and anyone with a shred of common sense knows that at some point a major currency, possibly the US dollar, will collapse.
Thanks to VS for contributing to this report.