No, it isn't a cruise ship. It is the second round of quantitative easement. What is QE? Well, first the federal reserve just creates an account and fills it with money that wasn't there a minute ago. Then they use this newly created money to "ease" the supply of money by buying bonds from banks. the banks then have money to use for lending.

From what I have read about this, it is risky at best and could lead to the further erosion of the economy. At the very least, it piles more debt onto our economy.

I've been trying to read up on this. I do not claim to be an expert, and from what I have learned, our leaders do not understand it either. Here is some reference material:

http://en.wikipedia.org/wiki/Quantitative_easing

http://www.businessinsider.com/qe-2-may-be...-options-2010-8

http://www.businessinsider.com/quantitativ...cularly-2010-10

http://www.huffingtonpost.com/jodi-beggs/w...i_b_774941.html

Note well that some of these articles are contradictory, or leave out information that others include.

Some say this is needed to get the economy moving because the Fed cannot lower the interest rate any further. QE will push money into the system and make it easier to borrow and spend. Others warn that this will lead to inflation and may not work at all because there is simply no demand for cheap money right now.

If any of you understand this better than me, feel free to give it a shot. I'm trying to figure out what this means for the economy and my retirement account.

 

I guess it is not a house-hold issue fo rthe rest of you, either.

 

I don't understand it but I am beginning to think our broker is right about 2029 basic living expenses being around $25,000/month.

 

All I can make out of it is the Fed is going to create new money from nothing by buying bonds so that the banks may create more new money from nothing by making loans.

I don't see any scenario in which that wouldn't be inflationary. But a little inflation might be a good thing - at least bonds, CDs and savings might see a bump in interest rates.

 

As a listener of National Public Radio (NPR) during my morning and afternoon drive times I knew and understood what you meant by this.

 

The Realtors, mortgage originators, and house builders got fat at our expense, and we just need to let the crap work through the system. A little hard living would build character.

I know that you don't subscribe to the "moral hazard" side of the arguement but I do. I don't want to live in a society where gamblers don't suffer the consequences of their losses.

 

Paul Krugman chimes in, sort of - often can't tell whether he is in favor or not.

Link to Krugman

The risk is that A little inflation could be like being a little pregnant. Once that dragon is out of the cave, it can be damn hard to stuff it back.

 

I think we'd be seeing it already if more people were employed and those who are employed were spending money.

 

I don't believe anything I read in regards to the market anymore and i am up 13% YTD so

 

This really isn't about the market, Dave. This is about the fed flooding the banks with money.