In what I believe is the 1st time a Fed member has quantified the size of potentially more QE, the ultra dove Evans says it could be $600b, in what would likely be in the MBS space, in a Q&A after a speech. Evans dissented in the past few FOMC meetings in 2011 in that he wanted more QE. He however doesn’t vote in 2012 but there will still be plenty of doves on the committee to follow thru. As I wrote earlier today, further artificially suppressing the level of interest rates is not the solution to a deleveraging cycle, time and debt paydown/writedown is. However, central bankers and politicians don’t have the luxury of time and thus patience and it’s why QE will continue to be their preferred answer. At some point they’ll realize it doesn’t work but how much damage will have already been done to the value of paper currencies and resultant inflation before they do?
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