This one's short today as I am running out of time. I posted earlier regarding Bill Gross' comments about the Fed doing a mortgage-backed QE3. There's nothing fundamentally off about this call. But we really aren't there yet as it is wholly dependent on the US economy. Right now the Fed is on cruise control until the economy breaks one way or another. That means they are committed to zero rates through 2014. Tim Duy's reading of events below makes sense to me because what he's saying is that the Fed would actually withdraw liquidity and start to tighten if the economy moves strongly toward robust job growth. if the US economy weakens, only then will the Fed resort to QE.
QE is bad policy in my view because it is just an asset swap. Only in a loanable funds view of the world can it work....
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Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.