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November 19, 2010


Alec Rawls

Bernanke was my professor for monetary economics at Stanford and I agree that he is no where near stupid enough to believe the explanation he stated publicly for quantitative easing, but I have a different theory of what he is actually up to. My guess is that the loanable funds market is just not deep enough to supply the current $100b increase in the national debt without creating a spike in interest rates, and at current very low rates, even a small increase would cause a huge proportional increase in national debt servicing (in addition to further weakening the housing market, as you point out). The result would be a vicious cycle that could quickly explode and bring the whole mess crashing to the ground.

That is, I think Bernanke is intentionally monetizing debt as a way to avoid a relatively-immediate crash. But this is only a delaying action, pushing the debt crisis a little further down the road, where it will be compounded by growing inflation. If things are really this bad, we are doomed, but I don't see any other explanation. Bernanke's inflation-for-inflation's-sake explanation doesn't even begin to hold water. It has to be the other effects of monetization--on housing, investment and short term interest rates--that he is looking at.

Hal (GT)

The actions that the fed are taking spell one thing: there is no recovery. They are seeing just the opposite in their numbers. More QE means postponing the death of the patient in hopes of some magical cure.


I think that to receive the loans from banks you ought to have a great motivation. Nevertheless, one time I've received a collateral loan, just because I was willing to buy a building.

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Quantitative easing is just not going to work how can you solve this crisis by printing more money?

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I have a different explanation for the Fed's latest easing program: Without another $600 billion floating through the economy,

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Yes real estate is one of the area's that suffers from drawbacks. I think we still have a lot of misery to come.

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Euro-zone finance ministers plan to meet again this Sunday to address the Greek tragedy. But so far the only plan on the table is a doomed one by the French for the voluntary restructuring of sovereign Greek debt. Private buyers are increasingly skeptical of government guarantees and will demand real collateral. Credit default swap derivatives, which merely spread the risk, will no longer do. Some other sweetener will be needed. The solution? Bonds backed by real Greek assets.

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The loans "" seem to be important for people, which are willing to ground their own company. In fact, this is very comfortable to receive a commercial loan.

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