Tuesday, August 23, 2011

Marc Faber: We Are in the Midst of QE3 Already

With the market waiting in anticipation for The Bernank's FOMC statement at Jackson Hole this week, today Bloomberg interviewed Marc Faber who explained things far too accurately and clearly for the MSM viewer to handle:
We are in the midst of QE3 already.

I think what [Bernanke] will say is that they are monitoring the situation, and they will take ‘appropriate measures’ when they are required.  To some extent we are in midst of QE3 already, because by announcing the Fed will keep zero interest rates until the middle of 2013, they basically encourage financial institutions to borrow short-term and to buy 10-year Treasuries.

I would like to remind you that the 10-year has made a new low. [Gluskin Sheff economist] David Rosenberg was right and I was wrong. The 30-Year has not made a new low.  The low in December 2008 was 2.53%.  Now we're around 3.4%.  Basically we have an artificial market.  The Fed has said we guarantee next to zero interest rates for the next two years. Banks and financial institutions are pouring into the 10-year because of the low rates at the present time.