Wednesday, September 7, 2011

Relieved that there is no QE3

I am kinda relieved that the Feds did nothing in their most recent meeting because QE3 will not have any noticeable effect to the economy other than driving up inflation. In the US, I believe deflation is no longer a concern and in fact, inflation has been ticking up. Problem? Unemployment is not going down. QE3 will make things worst.

Personally, I feel that cutting the rates paid to banks parking their excess reserves in the Fed will help push the banks to think of ways to increase lending. The most recent rumour of driving the long term interest rates down and pushing the short term interest rates up is also one of the ways where the Feds can help to relieve the mortgage crisis for a while.

I believe the Feds should just stop at that. Driving down the unemployment rate is the job of the US government, not the Feds.

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