Fed Has A Policy Meeting This Week That May Reveal Their Next Financial Play
Fed Chairman Ben Bernanke, has been increasingly concerned about the economic numbers that have been released over the last several months. Since April the economy has grown only 1.5%, and job growth numbers have been increasingly weak. Bernanke has declared that the fed will take action if the economy stays weak and unemployment remains high. This week the fed has a policy meeting that may reveal that another round of Quantitative Easing is in order. However, many analysts speculate that nothing will be done until September when the Fed has July and August job numbers to get a better feel for where the economy is headed. Paul Edelstein, the director of financial economics at IHS global economies made the comment “I think they are inching towards another round of QE, but I am not convinced they will get there at this meeting.”
Most Feel QE3 Will Not Be Effective To Stimulate The US Economy
The Fed has already initiated two rounds of Quantitative Easing, which is where the Fed purchases US Treasury bonds and mortgage based securities to lower the long-term interest rates, thereby encouraging borrowing and spending. However, most feel another round of quantitative easing will not be effective to stimulate the economy. If individuals and businesses have not yet started borrowing, they are unlikely to do so as a result of another round of easing. Interest rates are already incredibly low, so driving them lower is rather unlikely. The 10 year treasury is very near the recorded low at 1.39%, the nationwide average for a new car loan is only 3%, and housing loans for a fixed rate 30 year mortgage are at the record low for the last 60 years at only 3.5%. How much lower can we expect things to go?
Decisions For QE3 Are More Likely To Be Made In September Policy Meeting
Too many are standing in the way for Fed. Bernanke to initiate QE3. Many of the regional Fed banks are very concerned that QE3 will damage the dollar and cause sky-high inflation later on. In all likelihood Bernanke will utilize the time between now and September to examine job reports and convince those who are against QE3 to implement the easing in September.
Get A Hedge Against Dollar Inflation That Will Occur From QE3
In all likelihood, the consumer confidence needs more than an easing Band-Aid to be restored. With talk of the debt crisis in Europe, and the fiscal cliff looming ahead in 2013, businesses and individual consumers alike are sitting tight until they have a better feel for what lies ahead economically. As an investor it is a great time to examine your assets to make sure you are properly situated for what lies ahead. If the Fed succeeds in initiating QE3, what will that look like for your dollar and your dollar based investments? If the dollar gets further eroded and inflated from economic stimulus, it would be wise to make sure you protect your assets by having a hedge in gold and silver. Gold and silver are the only investments that can protect your wealth from the destructive power of inflation. To learn more on the upsides of investing in gold and silver visit redhawkgoldandsilver.com/barney