Austerity is a Lie.

[Octafish]

37. Bernanke free to print all the money Wall Street Banksters need in 2013...

2013 Is Bernanke's Year: Unlimited QE And Total Control Of The Fed

Agustino Fontevecchia
Forbes 12/20/12

Barack Obama‘s decisive victory over Mitt Romney in the presidential elections has cemented the future path of monetary policy under Ben Bernanke.  After unveiling a fourth round of long-term asset purchases, or quantitative easing, and a new threshold-based guidance, the Federal Reserve has put itself on a path of unlimited purchases of Treasuries and residential mortgage-backed securities (RMBS) until the unemployment rate falls.  The FOMC’s natural rotation will only strengthen the Chairman’s control of the committee, while an Obama Presidency and a Democratic Senate guarantee a continuation of current policies, either under Bernanke or Vice Chair Janet Yellen.

Thus, interest rates will remain repressed through 2013, the U.S. dollar should depreciate moderately, and stock markets will continue to receive masses of liquidity.
Bernanke and several of his central bank colleagues around the world have unleashed a new era of monetary policy, marked by zero-bound nominal interest rates coupled with unprecedented and massive balance sheet expansion.  In this post-financial crisis world, the Fed has taken a Keynesian edict and turned it on its head: instead of the government stepping in after a crisis to make up for the loss of aggregate demand from the private sector, it has fallen to central banks.

Through that process, the Federal Reserve has become the most important market participant, flooding markets with liquidity and owning more than a third of the Treasury market by the end of next year, according to Barclays’ economics team.  The latest iteration of their asset purchases, or QE4, consists of $40 billion a month in RMBS purchases and $45 billion in unsterilized Treasury purchases, meaning the Fed’s balance sheet will grow at a rate of $85 billion until the Fed sees a substantial improvement in labor markets.

The Fed is set to turn even more bullish in 2013, as its natural rotation sees two centrists and Jeffery Lacker, head of the Richmond Fed and a lone dissenter in the FOMC, replaced.  In their place will come Esther George of the Kansas City Fed (a moderate hawk, which means she’s mildly opposed to more accommodation) and James Bullard of the St. Louis Fed (who has the potential to be a dissenter, according to Barclays), along with ultra-doves Charles Evans and Eric Rosengren.  Furthermore, Minneapolis Fed chief Narayana Kocherlakota, a former dissenter, has quietly moved to a more dovish stance, adding further support for the Chairman.

CONTINUED...

http://www.forbes.com/sites/afontevecchia/2012/12/20/2013-is-bernankes-year-unlimited-qe-and-total-control-of-the-fed/

Talk about deep doo-doo.