The Phaserl


No Tapering, No Exit Strategy

by Peter Schiff, Lew Rockwell:

Most on Wall Street had expected that the Fed would use this June meeting to finally signal that the deceleration of its quantitative easing program is in sight, if not exactly underway. But even these modest expectations have once again been unfulfilled. Although many haven’t yet realized it, the financial markets are stuck in a “Waiting for Godot” era in which the change in policy that all are straining to see, will never in fact arrive. Most fail to grasp the degree to which the “recovery” will stall without the $85 billion per month that the Fed is currently pumping into the economy. Knowing this, the Fed is likely to keep its foot firmly on the accelerator, regardless of the data.

It’s fascinating how the goal posts have moved quickly on the Fed’s playing field. Months ago the conversation focused on the “exit strategy” it would use to unwind the trillions bonds that it has accumulated over the last few years. Despite apparent improvements in the economy, those discussions have given way to the more modest expectations for the “tapering” of QE, which is defined as some type of deceleration of its monthly purchases. I believe that we should really be expecting a “tapering” of the tapering conversations.

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