Saturday, 15 September 2012

Hunter Lewis: What is Bernanke really up to?

Here is Hunter Lewis', cofunder of, take on Bernanke's reasons for the Fed's QE3 announced Thursday,
The most likely explanation is that Bernanke is worried about the treasury auction market. He wants to be able to use his printed money at will to support it. The new printing and bond buying program is open ended by date. It can continue indefinitely. Ostensibly the QE3 purchases will be mortgages. That will help the banks, will help treasuries indirectly, and the program can always shift into treasuries at any time. The next step will be to remove the monthly limit and then, presto, the Fed will be able to print and monetize debt at will.
This is also a good time to start the process because other major currencies are committing their own forms of hari-kari [I believe he is referring to "ritual suicide by disembowelment with a sword when disgraced or under sentence of death"] . At least for the moment global bond buyers won’t be exiting the dollar in favor of the Euro or Yen– or even the Swiss franc, since the Swiss authorities are madly printing money too.
At some point, however, Bernanke will go too far and spook the foreign buyers. Then his game will be up.
Go here for the complete article.


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