Good Morning. If you read much commentary this weekend across various blogs, media outlets, etc the common belief is that QE3 will be launched on Thursday. Perhaps these forecasts are correct though I disagree (Macro View September 9, 2012). But what I find amazing is the argument for why QE3 will be launched is rather limited.
No one takes into account the costs of such a program. Real costs the Fed is clearly weighing. Instead they continue to take the Fed at their word after fifteen months of threats to expand the balance sheet. That’s an amazing statement. For fifteen months the Chairman has been threatening to expand the balance sheet and each FOMC meeting, participants believe him. The psychology behind the movement of capital is extremely skewed right now.