Gyroscopic Investing

The Federal Reserve on Wednesday announced that it will launch a fourth round of quantitative easing (“QE4”?), this time committing $45 billion a month to the purchase of long-term Treasury securities.

...along with Washington’s open-ended $40 billion a month program to buy up mortgage backed securities (“QE3”?), total monthly bond purchases by the Fed will amount to $85 billion.

the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent...

http://www.theblaze.com/stories/fed-ann ... ve-easing/

More pissing in the wind of deflationary forces...  The market is suitably unimpressed.  I really like MT's analogy of Bernanke with a fire hose trying to hold back a tidal wave.

Honestly, I do think Bernanke has done a fairly good job of trying to balance out the deflationary forces, to the best of his ability.  What Bernanke is trying to do is almost impossible without some policy help from the current inept congress.  The simple threat of the fiscal cliff has already caused immense actual harm to the economy.  I work for a Fortune 15 company that is delaying purchases and investments simply because of the fiscal cliff.  If we are delaying spending, you can bet everyone else is doing it.

If my math is right, I think this QE3 and 4 will increase M3 by 5.7% in one year (not including any other influences).  Makes me sad 

M3 = $17.7 T
QE 3 & 4 = $1.02 T

Each one of these rounds of QE has less impact than the last.

What Bernanke is doing reminds me of the premise behind the movie Frankenweenie, except rather than being about a boy whose dog died, it's about a central banker whose economy died.

Why are bonds down?  Market was expecting even greater commitment?

Plus lots of bond sales coming up...