Just a few months of relatively
positive news, the sillies at the Fed already start to make noise about taking “unlimited”
QE away. It is really not unlimited, and should be much larger. Taking it away
earlier would only send Treasury yield down eventually before the Fed has come
back to do even bigger “unlimited” QE again (bigger unlimited, see how silly it
is). This reminds me of my visit to the Fed in early 2011. Everyone I met there
tells me how they are preparing and proposing the mechanisms to take away QE
liquidity (note that this means to stop QE, and also reverse it). Two years
down the road we are still in bigger unlimited QE. For the US to recover with
the half hearted decision makers and the constant distraction from the
Republican side, it may take to 2015 for the economy to be on real sound
footing. Fortunately, I do not think the detractors at the Fed will succeed, at
least not this year. Unfortunately, it means bubbles in HK and many other
places in the world will take longer to burst.
After the recovery is on sound footing,
then it is the time to think about dealing with deficit.
No comments:
Post a Comment