U.S. Economy, Market Now Facing a Monetary Cliff

By Matt Nesto

Just when we were getting our heads around the idea that we're speeding down Fiscal Street and about to go careening off of "fiscal cliff," a new - and similar - risk has been added to the mix this morning.

According to Goldman Sachs economist Jan Hatzius, the Federal Reserve is essentially driving down Monetary Road and there's a good chance we're about to also have an accident at "monetary cliff," following Wednesday's moves that slashed the growth target and extended the rate-rejigging plan called Operation Twist.

What this means is, if there's not an unexpected improvement in the jobs market and economy in the back half of the year, then come 2013, the Fed will have no choice but to lever up and undergo another round of quantitative easing or QE3. If true, it would be a move rife with political, economic and inflationary risks as well as one that might not even work.

"I question how much additional quantitative easing, as well as what the Fed did yesterday, really impacts the real economy," says Jerry Webman, Chief Economist at OppenheimerFunds in the attached video. "I'm not sure there's a lot they can do that's going to really goose the economy at this point."

From Webman's point of view, Ben Bernanke has already repeatedly urged Congress to help carry the load and address the aforementioned fiscal dangers that have been brought on by uncertainty surrounding tax and budget policy, arguing that the Fed chief needs to say again, "guys this is not entirely up to us," in terms uncertain.

The risk in unambiguously asking for help, however, is spooking the markets by making the problem seem as if it is beyond the Fed's control. That the so-called "Bernanke put," that implies the Fed will always be there to save the day, may be about to expire.

To be sure, not everyone feels QE3 is a done deal for Q1, but it is clear that a new derby of sorts has begun and the wagering will be set on a data-point-by-data-point basis from now on.

"I think it's also a still a question of 'if,'" Webman says about the prospects for QE3. "I mean, if the economy continues its slog forward, I think the Fed wouldn't want to attempt some kind of policy that would have a marginal effect and open them up to the criticism of being politicized."

Of course, even if they do nothing, the Fed still risks being politically labeled, or worse, inept.

http://finance.yahoo.com/blogs/breakout/quit-teasing-easing-why-qe3...

Views: 87

Comment

You need to be a member of 12160 Social Network to add comments!

Join 12160 Social Network

Comment by Anthony Furciniti on June 23, 2012 at 8:21pm

yes it apppears no one is awake to notice how in violation of our constitution all this really is

most r too busy too tired or plain don't give a sh**

 

Comment by Patriot Pete on June 22, 2012 at 4:38am

Continuing on the path to socialism and globsalization

"Destroying the New World Order"

TOP CONTENT THIS WEEK

THANK YOU FOR SUPPORTING THE SITE!

mobile page

12160.info/m

12160 Administrators

 

Latest Activity

Doc Vega replied to cheeki kea's discussion Would-Be Trump Assassin Ryan Routh Gave Many Interviews with Mainstream Media
"This asshole had an incredible number of overseas connections and incoming money from unnamed…"
yesterday
rlionhearted_3 posted photos
yesterday
cheeki kea replied to cheeki kea's discussion Tartaria
"It's been interesting reading the comments from the Hungarian Tartaria fans on social media…"
Tuesday
Burbia's blog post was featured

James Comey appears to call for the assassination of President Trump

I'm sure these are the kind of shells Comey is implying here. …See More
Tuesday
tjdavis's blog post was featured
Tuesday
cheeki kea's 2 blog posts were featured
Tuesday
Doc Vega's 5 blog posts were featured
Tuesday
Less Prone commented on Doc Vega's blog post Memorial Weekend Getaway Horror Story
"A nice story"
Tuesday
Less Prone favorited Doc Vega's blog post Memorial Weekend Getaway Horror Story
Tuesday
Doc Vega posted a blog post

Memorial Weekend Getaway Horror Story

The wife and I had been trying to find some vacation time together for weeks when finally Memorial…See More
Monday
cheeki kea commented on cheeki kea's photo
Sunday
cheeki kea posted a photo
Sunday
tjdavis posted a video
Sunday
Doc Vega commented on Burbia's blog post James Comey appears to call for the assassination of President Trump
"Goes to show what ruthless bastards we have in the federal government!"
Saturday
Doc Vega favorited Burbia's blog post James Comey appears to call for the assassination of President Trump
Saturday
Doc Vega posted a blog post

Memorial Day Special: The Battle of the Coral Sea and its Incredible Impact

 When we re-examine major events in history sometimes truly significant occurrences can be…See More
May 23
cheeki kea posted a video

Trump Just Wrecked South Africa...

President Trump just met the president of South Africa, and the discussion quickly turned to the refugee crisis taking place in that country, and what the So...
May 23
cheeki kea commented on Burbia's photo
Thumbnail

What's in Macron's hand? Cocaine bag?

"I think folks need to watch the vid and make up their own minds about the question. It's not…"
May 22
cheeki kea posted a photo
May 22
Doc Vega posted a blog post

The Vampires of Washington DC

 There are many forms of vampire from the supposedly mythical humanoid form to the actual bat that…See More
May 21

© 2025   Created by truth.   Powered by

Badges  |  Report an Issue  |  Terms of Service

content and site copyright 12160.info 2007-2019 - all rights reserved. unless otherwise noted