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Is The Fed Maybe Sorry It Ever Mentioned QE2?


The Fed has had stocks and gold spiking up since early September, and the dollar plunging, first on hints that it might consider providing another round of quantitative easing if the economic recovery continued to worsen, and then practically promising that it’s ready to do so.

It was a complete turnaround from earlier in the year, when the central bank was saying that the recovery was coming along nicely and it was time to begin removing some of last year’s stimulus programs to prevent the economy from overheating and causing inflation. As late as June its statement after its FOMC meeting said, “The recovery is proceeding and the labor market is improving gradually. Household spending is increasing.”

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Even in its statement after its August meeting, while it worried, “the pace of the recovery in output and employment has slowed in recent months,” it didn’t seem too worried, saying, “nonetheless the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, although the pace of economic recovery is likely to be more modest in the near term than had been anticipated.”

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