Tag Archives: qe

• Jim Rickards – “QE is dead, long live QE!”

MK: Jim Rickards comments are a ‘must read’ these days for those of us who are economics, markets and finance junkies. The first part of this piece covers the QE stuff – and then he gets into; “It is difficult to know the exact maturity structure of all of the notes and bonds” stuff. This is where it gets really interesting. The best way I have to attach an analogy is to imagine the Fed eating a porcupine in the act of expanding its balance sheet. Now imagine the Fed trying to pull the porcupine out – from the same direction it went in. Not a pretty picture. The lie given by Ben B. on the 60 Minutes show is that he can reverse ‘easing’ in 15 minutes and begin ‘tightening.’ But as Rickards keeps hammering home, it’s simply absurd, given the structure of the debt involved to think this is possible. The conclusion is that the Fed is so confident about reversing itself because it plans to NEVER do anything but more QE. Forget ‘fractional reserve banking.’ We’re talking ‘virtual reserve banking.’ Imagine if Zynga and Farmville ran the Fed and you get the idea. As long as there are elections in the universe to monetize and call ‘money’ the Fed’s balance sheet will continue to expand just like the universe itself.