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An Open Letter To The QE Crowd: Give Up

Published 09/01/2012, 03:45 AM
So… all of you were clamoring that QE 3 was coming. It was guaranteed.

Well guess what. It didn’t. You were wrong. 100% wrong. All we got was the same tired “the Fed stands ready to act” tagline from Bernanke.

This was the obvious conclusion anyone who actually bothered doing research would come to. Bernanke stated as far back as May 2011 that the consequences of QE outweighed the benefits. He also stated a month ago that for the Fed to buy too many Treasuries or Agencies would “hurt” the financial system.

But no, everyone and their mother was positive QE was coming. Never mind what Bernanke actually says. Never mind that food and gas prices are near record jighs. Never mind that the political consequences of QE now would assuredly cost Obama the election and result in Mitt Romney taking the Fed to task once he was in office… QE was definitely
coming Friday.

You were wrong. You’ve been wrong for over a year. The fact the market has ramped after the Fed disappoints only shows how desperate the QE crowd is (“surely this leaves the door open for QE down the road”. We’ve been through this same tired scheme over 10 times now.

It’s 100% totally and completely pathetic. And the fact so many people buy into it is proof positive that sadly many investment professionals don’t have a clue how to perform critical analysis or even accurately engage with reality.
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So Bernanke disappointed. Next up is the ECB. What happens if it disappoints? What happens if the whole “Central Banks can save the day” philosophy turns out to be total nonsense?

Just a thought. One that might be worth considering given that the claims of more QE have proven to be bogus for over a year now.

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