Wednesday, November 03, 2010

Prepare for QE II, III, IV, V,.....

The Fed's announcement today tells me that they are about to get serious about restoring robust levels of economic growth. Yesterday's election results mean that they won't be getting much help from fiscal policy. So I think the market is going to start anticipating further rounds of "quantitative easing" (QE) on the part of the Fed.

This should send the dollar into the tank (I am guessing 65-68 on the dollar index), gold and silver upward, long term bond prices down and long term interest rates up, and the stock market WAY up.

Once it becomes obvious that economic growth has been restored and unemployment comes down below 7% I think QE will cease. At that point the markets will probably all suffer a big reversal and in particular a bear market in stocks will become likely.


pimaCanyon said...

I think you're right about what's going to happen to the dollar and to stocks and commodities. My only question is whether this will restore real economic growth or whether this is just an elaborate Ponzi scheme. Dollars out of thin air is certainly keeping stock and commodities prices high, but how will this foster economic growth? Doesn't that growth depend on job creation? Is this money-from-nowhere just kicking the can down the road, or will real growth be the result?

I wonder too about Americans who don't have the means to participate in these rapidly rising prices in stocks and commodities (wealth "creation"). How will they benefit by higher food and energy prices, higher cost of goods in general? How will Americans on fixed income benefit? Or retired people who depend on interest from their savings which will now earn near zero?

The Fed rigs the game in our "free market". Those who choose to play (and have the means and intelligence to play) must play by their rules (and they change the rules from time to time too!). Those who don't have the means--or lack the intelligence or education--lose out.

AristotelCostel said...

kcounty said...

wow. now that was a BIG forecast!

PLEASE tell me what single investment vehicle i should buy to best take advantage of this move up? 2X ETF? 3X ETF? I just dont day-trade like your new service offers, but would really appreciate a solid, single investment, i could plunk money into every month for the next (5 years?) before the crash.

dooo tell?!

Win said...


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I haven't joined your service because I've been too busy at the FT job to do any kind of day trading, but I will donate again this holiday season.