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Printing More Money: Analyst Says to Prepare for 3rd Round of Quantitative Easing

From The Blaze:

QE1, QE2, and now, QE3? No, those aren’t British monarchs. Rather, they’re the numbers and letters that have become synonymous with the Federal Reserves practice of printing money and flooding the market with cash through the use of the bond market. By buying up bonds, the Fed has to “print money” to cover the sale. And when more money hits the market, so too does inflation.

The Fed has already gone through two rounds of quantitative easing, and now one analyst says we should get ready for a third round.

Simon Maughn, co-head of European equities at MF Global, told CNBC Wednesday that he sees the move on the horizon, and once again the U.S. will be a big buyer.

“The bond market is going in one direction which is up-falling yields which is telling you quite clearly the direction of economic travel is downwards. Downgrades. QE3 (a third round of quantitative easing) is coming,” he said. “The bond markets are all smarter than us, and that’s exactly what the bond markets are telling me.”

He added: “One more big injection of cash into the bond market should take you through at least the summer season into the beginning of the fourth quarter.”

“That cash injection will have the normal inflationary knock-on impact, driving back up commodities, supporting industrial stocks, dragging the financials up with them… I think it’s all about the monetary injection trade.”

Watch below:

The move is significant especially when you factor in rising food prices. According to the LA Times, wheat prices are “70% higher than a year ago,“ while ”prices for corn have more than doubled in the last 12 months.”

The End of the Dollar?

From The Weekly Standard:

The fuss about a possible default if our warring politicians fail to agree on an increase in the debt ceiling is good fun for reporters: the president removed himself from the negotiations in favor of a visit to the Palace and says he won’t agree to cut spending unless the Republicans agree to raise taxes on the rich, variously defined as families earning more than $250,000 per year and “millionaires and billionaires.” Some Republicans say they don’t fear default because keeping the ceiling on spending will reassure financial markets and prevent a downgrade of U.S. Treasuries even if there is a brief and well managed default. And all parties to the dispute are enjoying the sense of importance that comes with being key players in the “crisis”—politicians relish the spotlight. And all know that the crisis will be resolved by a last-minute deal that allows everyone to claim victory but postpones meaningful decisions until after the 2012 elections. All the negotiators, but not all investors. The gross value of contracts insuring against a U.S. default, although still small relative to the size of the Treasury debt market, has doubled from a year ago.

Read the rest at The Weekly Standard.

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But with respect to future debt; would it not be wise and just for that nation to declare in the constitution they are forming that neither the legislature, nor the nation itself can validly contract more debt, than they may pay within their own age, or within the term of 19 years. — Thomas Jefferson, September 6, 1789

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