Comment on Federal Reserve, Quantitative Easing (tapering), Repo rate

arcus commented on 22 Sep 2013, 07:17 PM

There has been relative inflation.
We have seen
1) Inflation of stock prices (stocks going up)
2) Infation of bond prices (bonds going up, yields going down)
3) Inflation of commodity prices (crude is pretty buoyant) and
4) Inflation of home prices in the US (half of the QE every month actually goes into buying Mortgage backed securities)
5) Dollar weakening relative to the G10 currencies as potrayed by the fall in dollar index

The CPI inflation is USA is still around 2% but even that is pretty high relatively speaking due to the fact that there would have been severe deflationary pressures if QE wouldn’t have occured.
Its like saying +2% is much higher than -4%.

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