Tuesday, November 2, 2010

QE2 May Be The Biggest Non-Event Ever

After the talk of #2T or $4T of QE2, rumours and news are being floated now that QE2 will be just $500B, spread over 6 months.

This is low enough to keep the US dollar from cratering, while the Fed may also announce that it is "ready to do more as soon as conditions warrant it".

GS said so this morning, now Bloomberg reports that same figure.

While traders are all excited about possible stock collapses, and gold bugs are equally irrational about gold going to the moon, this may actually be the biggest non-event ever.

Bloomberg: "The Federal Reserve will probably begin a new round of unconventional monetary easing this week by announcing a plan to buy at least $500 billion of long-term securities, according to economists surveyed by Bloomberg News".

"Policy makers meeting tomorrow and Nov. 3 will restart a program of securities purchases to spur growth, reduce unemployment and increase inflation, said 53 of 56 economists surveyed last week. Twenty-nine estimated the Fed will pledge to buy $500 billion or more, while another seven predicted $50 billion to $100 billion in monthly purchases without a specified total. The remainder said the Fed would buy up to $500 billion or didn’t quantify their forecast".

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