Is QE Infinity Enough?

The Fed has now promised QE infinity. But will it be enough, in the face of Federal deficit financing to infinity and beyond? Because for every dollar the Fed has promised to print and pump through Primary Dealer accounts into the financial markets, the US government has promised to issue about $3 in new debt.

$1 of financing for every $3 of new Federal debt is a whole new game of QE Lite that is unproven. Under earlier versions of QE, the Fed always printed QE dollar for dollar of Federal debt. The Fed monetized everything through its middlemen the Primary Dealers.

Under Pandemonium Panic QE, back in March and April, the Fed actually pumped in $2 for every dollar of new Federal debt issuance. That drove a meltup in stock prices. Which in turn triggered a rebirth of animal spirits and wild speculation in a bubble within a depression, the likes of which we’ve never seen.

So is this bubble sustainable when the Fed will only buy a third of the Mount Gargantua of new Federal debt issuance each month?

I’ll just say, Harrumph! I highly doubt it. I explain why, herein.

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Lee Adler

I’ve been publishing The Wall Street Examiner and its predecessor since October 2000. I also publish LiquidityTrader.com, and was lead analyst for Sure Money Investor, of blessed memory. I developed David Stockman's Contra Corner for Mr. Stockman. I’ve had a wide variety of finance related jobs since 1972, including a stint on Wall Street in both sales, analytical, and trading capacities. Prior to starting the Wall Street Examiner I was a commercial real estate appraiser in Florida for 15 years. I was considered an expert in the analysis of failed properties that ended up in the hands of bank REO divisions, the FDIC, and the RTC. Remember those guys? I also worked in the residential mortgage and real estate businesses in parts of the 1970s and 80s. I have been charting stocks and markets and doing analytical work since I was a teenager. I'm not some Ivory Tower academic, Wall Street guy. My perspective comes from having my boots on the ground and in the trenches, as a real estate broker, mortgage broker, trader, account rep, and analyst. I've watched most of the games these Wall Street wiseguys play from right up close. I know the drill from my 55 years of paying attention. And I'm happy to share that experience with you, right here. 

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