What is QE3 or Quantitative easing 3? Quantitive easing is an unconventional monetary policy used by central banks to stimulate the national economy when conventional monetary policy has become ineffective. this issue become popular because it has deep effect to stocks market, money market and other financial market. In This case Bernanke as chairmanof the FED has important role, that's why this word "bernanke QE3" or "QE3 FED" are so famous.
Then what is differences between QE1, QE2 and QE3?
QE1 : In QE1, the Fed purchased agency securities and mortgage-backed securities rather than Treasury securities as it did in QE2. This is significant as Fed Chairman Ben Bernanke was at pains to stress that QE1 was “credit easing”, focused on the asset side of the balance sheet, and therefore distinct to what the Japanese had done. During QE1, the Fed purchased $175 billion of agency debt securities and $1.25 trillion of mortgage-backed securities in addition to purchases of Treasuries. In effect, the Federal Reserve became the market as the shadow bank sector imploded. The mortgage-backed securities market had ground to a halt and the Fed took the entire market onto its balance sheet to prevent a second Great Depression. - article in what is QE3.
QE2: Starting in August 2010, the Federal Reserve started reinvesting principal payments from agency debt and agency mortgage-backed securities that it had acquired in QE1 in longer-term Treasury securities. By November 2010, after the 2010 mid-term elections, the FOMC decided to expand its balance sheet by $600 billion through the purchase of Treasury securities. hus, QE2 was only successful insofar as it has increased business credit and raised asset prices. As we now see, the economy has actually cooled during QE2. the QE2 trade was effectively over in late March, asset prices and bond yields started to come down as inflation expectations plummeted.QE3 : The FOMC has already considered offering unlimited quantitative easing to target specific interest rates and buying municipal bonds.This coming Friday (August 26th) at the annual Federal Reserve week long symposium in Jackson Hole - Uncle Ben is going to speak. QE3 or no QE3 ? There are arguments on both sides. QE3 means more inflation. No QE3 and the Fed Gov may not be able to sell Treasuries at low enough interest rates to make ends meet. The Treasury has a lot of new debt to sell (Obama's fancy 2.4 trillion check) and a lot of old debt to turn over. If there is a QE3 then Wall Street will be Happy Street. No QE3 and no happiness. The Fed Res will never let a Treasury auction fail - failure being defined as not being able to sell the debt because there is a lack of bidders. So, QE3 or no QE3 ?- this article category : what is QE3, bernanke QE3 and QE3 fed, QE3 plan, QE3 schedule
After Q3 what are best stocks to be picked?
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