QE3 in August?

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Jim Hamilton knows a few of the key decision makers, and he thinks the Fed does QE3 (which i take to mean balance sheet expansion) at the next meeting.

I am thinking August or September. September is more natural, as the fed will have new forecasts and a press conference – but Jim’s contacts (and good judgement more generally) sway me heavily.

Three retail trade contractions in a row signal elevated recession risks in the US just now.


  1. And yet the S&P500 sails along in the 1300s. Based on Bernanke’s timidity to date, it’s unlikely that QE3 will be open-ended enough to prevent recession (which likely began in Q2 anyway).

    1. Retail trade data says the ECRI is right about that. I do no see why changing the term structure of government debt should do much at all, but i think that they will try – my guess is 500bn, split 50/50 between long bonds and MBS.

      Sent from my iPad

  2. QE again. it has been so successful.

    Try fiscal policy and ensure public sector employment moves along as in the past.

    how ironic it is only the public sector that is the problem.
    private employment has moved as it usually does but if the public sector moved as in the Bush years we would be looking at 7% unemployment. If you looked at the Reagan years it would be moving toward 6%.

    If only Obama had a full fiscal stimulus. The main culprits here are the States and local government.

    Classical Economics proved again!

    1. sure, things are sticky in the short run – but if govt is wasteful it’s a long term negative to have more of it. i know you agree that bush et al should have shrunk govt in the good years – but somehow this always seems impossible.

      got to make the most of a crisis – i’ll take less government any way i can get it.

  3. No point in having small government if it is too small and drags on the economy.

    you can have the government sector growing but still being small.

    1. I agree, the way this is being done is damaging – be very interesting to see how Romney defuses this time bomb if he is lucky enough to catch this hospital pass (esp given his pitch).

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