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Monday, September 27, 2010
Does anyone know an expression for when we are beyond uncharted waters?
QE2 is on the way, according to 70% of a recent CNBC survey of 67 economists, analysts, and technicians. It will likely add a chunk (is $1 trillion meaningful anymore?) to the Fed's balance sheet and supply an ever-growing pile of excess reserves - the fuel for printing money. The Fed's policy is to inflate our way out of our economic malaise.
The trigger point, according to Mark Zandi of Moody's.com, will be a rise in the unemployment rate to 10%. He believes QE2 will begin in December.
I think we should skip all this interim stuff and just have the Fed use their unconfined fiat money checkbook and add 20% to the bid for any house sale. The faster the Fed can get house prices ramping up again at a double digit rate and homeowners borrowing against their equity, the faster we can get back to the good ol' days of 2006. Who knows - we might even create a couple of jobs in the process, at least temporarily.