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What's Really Behind QE2

Saturday, November 20, 2010 - 7:06 AM
This Seeking Alpha article claims that the main intent of QE2 is to fund "the federal deficit without increasing the interest tab, something that may be necessary in this gridlocked political climate just to keep the government functioning."

If there's any validity to this, it means that the interest rate environment will likely not improve any time soon. The article also shows how QE2 may be worse for bank deposit rates than what we had thought:
The bankers who applauded QE1 were generally critical of QE2, probably because they would get nothing out of it. They would have to give up their interest-bearing bonds for additional cash reserves, something they already have more of than they can use.



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Ken TuminKen Tumin5,472 posts since
Nov 29, 2009
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