Goldman Presents The Three “Radical” Measures The Fed May Engage In To Turbocharge An Imminent QE3
“Goldman is not used to being snubbed when it comes to its policy recommendations. Which is what essentially happened during the Jackson Hole speech in which Bernanke left the QE3 door slightly open… but not enough to appease Bernanke’s Goldman alum superior at the New York Fed. As such, since at least a few days have passed without Goldman reminding of who calls the shots, here is probably the most comprehensive summary of the Jackson Hole aftermath, and what the market will now expect to come out of the Fed on September 21. Whether Bernanke will go ahead and listen to Goldman, is unknown – the Fed risks incurring the wrath of Goldman at its own peril. What is perhaps most interesting about self-Q&A are the Goldman proposed “radical” measures that the Fed could consider to employ in addition to LSAP and Twist which so far have proven to be ineffective: “There are three main ways in which the Fed could be more radical: (1) an extension of the QE program into markets other than Treasuries and agency MBS, e.g., private sector securities, (2) a much bigger QE program, up to the extreme version of a promise to buy as many securities as needed to hit a specific yield target (i.e. a “rate cap” further out on the yield curve as then-Governor Bernanke suggested back in 2002), and (3) an explicit or implicit change in the Fed’s policy targets.” If these are truly hints as to what the Fed should do, then we hope readers have their gold $3000 calls firmly in place.”
Via Zero Hedge
