November 8, 2010 Reading Time: < 1 minute

“The Fed could have sat tight to see whether the slowdown in growth in the second and third quarters of 2010 was temporary. Most of the economic news since the idea of more QE was first floated in August has been better than expected, if not exactly earth-shattering. Friday’s employment figures continued that trend. The Bank of England and the European Central Bank are adopting a suck-it-and-see approach, which doesn’t appear to be too bad a strategy.

Why? Well, consider the following factors. Firstly, the idea that the global economy is poised for an immediate double-dip recession is not born out by the statistics. Asia is booming, which is why India and Australia raised interest rates last week and why China is fretting about inflationary pressure. In part, that inflationary pressure has been caused by the first wave of quantitative easing, which simultaneously pushed down the value of the dollar, made the yields on US Treasury bonds less attractive and provided investors with ready money to speculate in other markets. Which is what they have done, driving up the price of oil, gold and industrial metals.” Read more.

“The Federal Reserve’s latest quantitative easing may lead to disaster”
Larry Elliot
The Guardian, November 8, 2010.

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Tom Duncan

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