[Sixstrings]

The Federal Reserve launched a controversial new policy on Wednesday, committing to buy $600 billion more in government bonds by the middle of next year in an attempt to breathe new life into a struggling U.S. economy.

The decision, which takes the Fed into largely uncharted waters, is aimed at further lowering borrowing costs for consumers and businesses still suffering in the aftermath of the worst recession since the Great Depression.

(snip)

Kansas City Fed President Thomas Hoenig continued his streak of dissents, saying the risk of additional securities purchases outweighed the benefits.
http://www.cnbc.com/id/39990450

From the Market Ticker:

The TBAC (Treasury Borrowing Advisory Report) is usually quite dry and boring.

Well, it is this time too.

Except for one small piece....

"The presenting member stated that the market expects the Federal Reserve to purchase $100 billion per month, as well as $30 billion per month in MBS reinvestments. This will total $1,560 billion in Treasury purchases over the next year. The member stated, however, that market participants believe the Fed will leave the status of QE2 open ended, with purchases ultimately dependent on economic conditions. The presenter also noted that the program should last six months to two years."

That's direct monetization of the entire Federal deficit.

I hope you like really expensive commodities and everything made from them..... if this is actually done, you're going to get them in spades, way beyond what's currently baked into the cake.
http://market-ticker.org/akcs-www?post=171129

Ok if I understand this correctly, KD is saying that the Fed is printing money to cover the ENTIRE federal deficit.

Anyhow.. the Fed may be able to print money, but they can't print jobs.

[mattduke]

QE2 is cover to take over flagging international demand for US debt.

[Cloud9]

All this means is that we are Weimar territory. The debasement of the currency is wiping out what is left of the middle class as we write. To preserve the status quo, the political class has made a deal to impoverish us all. This lame duck congress may call itself back into session and do something insane. The ballot precedes the bullet but not by much.

[Daniel_Plainview]

QE2 is cover to take over flagging international demand for US debt.

This makes sense, and may indeed be the actual reason for QE2. When foreign countries stop buying US debt, then Banana Ben becomes the only purchaser of US debt, and QE2 will be quickly followed by QE3, then QE4, etc. ... until KABOOM ...

[Mesuge]

matt> bingo

Btw. the real hard core Weimar starts when you park at Yosemite and newly installed No Trespass sign reads: Property owned by EasternPromises Dubai LLC.. Not there yet.

[copious.abundance]

An absolute, must-read:

Deconstructing QE2: It's Less Than Meets the Eye

But this isn't Argentina. The Fed is not going to print up a billion $100 bills every month and ship them over to Treasury. Instead, the Fed is going to buy $75 billion of Treasury securities each month on the open market, and it is going to pay for those purchases by crediting banks with newly created reserves. This is the way the Fed financed its first quantitative easing, with the purchase of $1.3 trillion of Treasuries and MBS — bank reserves increased by $1.3 trillion. Note, however, that even if the Fed buys $75 billion of Treasuries for the next 8 months, that will barely add up to 4% of GDP. Printing an amount of money equal to 4% of GDP is not going to greatly upset the inflation applecart.

Moreover, the reserves the Fed creates to buy the Treasuries can't be spent the way $100 bills can; they only exist at the Fed. They can only turn into "spendable" money if the banking system uses the extra reserves to create new loans (thus increasing bank deposits) or turns some of those extra reserves into currency. And either way, that process depends on the system wanting to borrow more money and/or hold more currency.

[mattduke]

Yes we know how the shell game is played OF2. The "treasury" sells debt to the primary dealers who hold it for two weeks. Then the Fed prints fresh dollars and buys it back from them. I seriously hope for your family's sake that you haven't completely missed out on all the gains in gold OF2.

[Sixstrings]

An absolute, must-read:

Well, I get your point with the article you linked. However.. it's just hard to believe that it's "no big deal" to fund about 20% of the entire freaking federal budget with baseless printing press money.

And don't forget there other things the Fed does besides the QE's.. like print money then loan it to hedge funds who buy stocks or inflate commodities with it. The whole scheme is a ponzi house of cards, seems to me.