Could QE3 Trigger a U.S. Depression?

[errolanderson]

Could further U.S. Fed bond purchases
(money printing) in effect spiking
inflation be a trigger for a U.S.
depression?

What if food prices go through the roof?
Great for growers, but not for Joe-
consumer. The prospect of QE3 has
definately Jekyll 'n Hyde consequences
(IMO).

Big Ben has done an admirable job
'kicking the can down the road'. But is
there much caution now needed for the
next button Bernanke pushes?

Maybe over-reacting, but certainly don't
like the smell of these markets right
now.

[GreenValley]

If QE3 go ahead, look out for China and
perhaps China is doing recast gold bar
to 1 kilo bar on massive scale so
encourage more exchange from other
country other than US. I think gold is
somewhat more popular if down to 1 kilo
bar. Good thinking China.

http://www.indiavision.com/news/article/
business/339477/china-launching-gold-
backed-worldwide-currency--now-the-
americans-will-have-to-find-a-reason-to-
go-to-war-against-china-/

[liberty]

Think back to the early 1970's for a moment. At that time, unchecked central bank money printing seemed harmless at first, but by the mid-70's was fueling an inflation problem that was becoming increasingly difficult to ignore. Politicians of the day justified this policy by claiming that inflation would reduce unemployment, but unemployment just kept going up anyway.

At the end of the 1970's, Paul Volcker jacked up interest rates and quelled inflation. As a consequence, unemployment soared and took years to abate. But that was the necessary and inevitable result of shutting off the printing presses that should never have been allowed to run amok to begin with.

We're repeating the same pattern again, folks. Eventually interest rates will have to rise and when they do, all the malinvestments in our economy, mostly centered on the government debt bubble and the entitlement state, will implode. It may take years for all these economic actors to find work in fields that actually produce wealth instead of consuming it.

[rhoff]

I think too much QE will result in stagflation which
will cause a lot of headwinds for consumers/wage
earners but be much easier than a depression. In
the seventies there was oil embargoes where
today the USA is on the cusp of a energy
revolution brought on by cheap nat gas.

[cottonpicken]

History doesn't repeat but it sure does rhyme,we can't
pull of another early 80's recovery that almost killed
us.

It is mathematically impossible not to have a qe
3,6,7,8,111.

It was no accident government debt has expanded at
the same pace that consumers has contracted.

The choice is 10 cent loaf of bread you can't afford or
a hundred dollar loaf of bread you can't afford.

[cottonpicken]

Listening to draghi now and their qe plans.

Its all so ****in ridiculous.

[ajl]

As cottonpicken said there is guaranteed
to be a depression the only choice now is
between an inflationary one or a
deflationary one.

[charliep]

Everyone here is doom and gloom (I share concerns) but my question is what actions come out of these factors.

My own strategy (60 ish to put in context) is to keep debt minimal and have a balanced porfolia of assets. I also recognize that inspite of all my best efforts, things may go south and I am prepared to live with this.

Others thoughts.

[Rareearth]

Perhaps reading "aftershock" a newyork best
seller will provide some answers. It's a logical,
easy and quick read, tough to put down book.

[liberty]

Bernanke along with every Mainstream Media talking head constantly raises the supposedly horrifying specter of "deflation" like it was some kind of boogey man. Ask yourselves this: when was the last time a major world economy ever experienced actual deflation? Not since the 1930's. Deflation has never occurred since, and will not occur in the future. Central banks are going to print money in infinitely large amounts because they're just a bunch of one-trick ponies.

The last thing these dopes want is for people to figure out that they're being lied to and for those same people to take measures to protect themselves from the wealth-draining effects of inflation. Bernanke and his cronies are petrified of average Joe Citizen ditching U.S. dollars and Euros (they already are ditching Euros) for something that has more value than toilet paper. When that occurs, much of the world's current financial infrastructure will implode, as it deserves to do.

[rhoff]

Liberty I think Japan has been experienceing
deflation for the past 20 years now.

[errolanderson]

liberty . . . enjoy your comments, they
are on-the-money.

but believe risk of deflation could impact
the crude oil market ahead. natural gas is
certainly deflationary. credit
deleveraging still in its early stages

[cottonpicken]

My mom(60's) and i where collecting coins from my
earliest memories,just as a hobby to have some from
each year,we would take a break for a decade or so
then go at it again.

So now when she looks at the values her mouth
drops,i try explaining to her about the metal content
of coins has changed,nickel no longer have
nickel,pennies no longer have copper,thats why they
have to get rid of the pennie now because metal
content value is yada,yada,yada.

So should we sell and put the money in the bank,she
asks?

I would guess 99 out of a 100 people would actually
think this is a good idea.

To hell with diversification.

[cottonpicken]

http://www.bloomberg.com/video/gross-gold-a-better-investment-than-bonds-stocks-67gICY2RTwy3MytiYpX8jg.html


PFFFFFFF!!!!!!!The worlds largest money manager said what about bonds and what about gold in the final seconds?????????????

[errolanderson]

U.S. / Cdn labor numbers out this
morning.

U.S. labor force now the smallest since
1981 (pre-Reagan era). 96,000 jobs
created last month, well below 125,000
expected.U.S. unemployment now 8.1%


Cdn unemployment steady at 7.3%, but
more jobs created in August (34,300)than
expected.