QE3: abbreviation for a third round of quantitative easing
The third quantitative easing (QE3): Since the end of June 2010, U.S. economic data, such as employment data, have nearly collapsed, and there is no hope of recovery. The quantitative easing that the Fed has had to make in order to deal with the unpredictable crisis: Third Sub-quantitative easing (QE3), or implicit. The Americans may think that the default of the Greek debt in Europe may drag the U.S. economy into recession again. The fact is that the U.S.’s own money spamming leads to the reduction of its international credit. The issuance of large amounts of bonds has greatly reduced the ability to fulfill contracts, and debt default has become possible. Sex.
The US banknote stimulus “cannot be stopped.†The re-exposure of hidden bad debts will be the trigger for the detonation of the US dollar bubble. The economy will repeat itself under the stimulus of “dollar drugsâ€, and then it will tend to decline. The US dollar system has no support. The United States has long overdrawn. At present, the U.S. government hopes to shift this risk out, or let other countries continue to raise interest rates, curb inflation, raise interest rates again, repeatedly inflation, and the currencies of the renminbi continue to appreciate. This is also a manifestation of the collapse of the US dollar.
Of course, the United States may also adopt a more bizarre idea - "war thinking". It can start the world's most powerful military machine, provoke disputes, disrupt the world, and various economic orders will cease to exist, and it may pass. It is once again powerful, establishes a new order that benefits it, and establishes yet another dollar hegemony.
With the approach of the global central bank's annual meeting, the market parties have heated up the hot debate on QE3 (the third round of quantitative easing policy). Is QE3 ready to go or is it completely dead?
Professor Guo Tianyong of Central University of Finance and Economics:
The possibility of QE3 launch is still very large. However, in terms of historical experience, that QE1 and QE2, or from the theoretical point of view, quantitative easing monetary policy to stimulate the economy of the marginal benefit in diminishing, while at the same time, the marginal utility of inflation in increments. If QE3 is introduced, it is likely to have two effects on emerging markets: First, it will lead to rising commodity prices; Second, it will cause a large amount of hot money to continue to flow into emerging markets, creating an asset bubble.
Ren Songjun, deputy director of the Institute of Currency Studies, Renmin University of China:
After entering the crisis in 2007, Federal Reserve Chairman Ben Bernanke broke all the precedents of the Fed's nearly 100-year history and adopted almost all forms of quantitative easing monetary policy. Strictly speaking, quantitative easing has never been withdrawn, so there is no question of when to start quantitative easing. People are now concerned about whether the Fed will once again announce the purchase of U.S. public debt.
The experience of the past few years shows that QE monetary policy has little lasting effect on stimulating the recovery of the real economy. Most of the money and credits it has released have flowed into the financial economy or the virtual economy. Household personal investment and consumer credit demand has been growing at a low rate or even negative growth because the deleveraging process is far from over and private sector credit demand is waning. .
A large number of currencies and credits have flowed into the virtual economy and the financial economic system, further exacerbating the divergence between the virtual economy and the real economy. This global stock market has shrunk substantially due to the reduction in the US sovereign credit rating, and is in essence the inevitable consequence of a serious departure between the virtual economy and the real economy. . QE3 will only once again exacerbate the global economic instability and will have no practical effect in stimulating real economic recovery.
Cao Fengyu, Director of the Center for Finance and Securities Research of Peking University:
For the United States, QE3 does not really have to be "launched" or "not launched" because QE3-like policies are actually being implemented. As long as the dollar hegemony is still there, the United States will still continue this kind of policy similar to the "rogue", forcing other countries to "thrifty" to pay for the "luxury" Americans themselves.
Mizuho Securities Manager Kengo Suzuki:
The QE2 implemented by the Fed is one of the important reasons for the rise in commodity prices. Therefore, if the Fed launches QE3, it will have the same effect. As the risk appetite improves and market funds are flowing into commodities, stock markets and high-yielding currencies, the Australian dollar and New Zealand dollar will benefit from it.QE3 launch should be how to deal with
There are growing signs that the Federal Reserve is preparing to launch a new round of stimulus measures and that foreign exchange gold investors may need to be prepared for it. The quantitative easing policy of the United States will often cause Asian prices to rise. It is also a signal that foreign exchange investors buy bulk commodities or hard currencies in order to avoid risk. Since Hong Kong adopts a linked exchange rate system linked to the US dollar, the quantitative easing in the United States will undoubtedly lead to inflation and rising asset prices in Hong Kong. This is undoubtedly aggravated when real estate prices remain at historically high levels.
According to the experts of the foreign exchange exchequer of FXCM, the Fed will launch a quantitative easing plan with a scale of USD 600 billion at the meeting in September this year. Experts in foreign exchange shouting orders believe that for Asia, the impact of the US quantitative easing policy on inflation is far more pronounced than the effect on economic growth, and it is basically pushing up inflation through rising commodity prices. Bank of America Merrill Lynch also pointed out that due to the implementation of the previous round of quantitative easing, Asian currencies such as Taiwan dollar, Korean won and Singapore dollar have shown a trend of appreciation against the US dollar. Although there are still some doubts about whether the Fed will launch the Third Round of Quantitative Easing (QE3), the market seems to have set aside the panic caused by the slowdown in China's economic growth, but is concerned about the prospect of implementing new stimulus policies. For example, the Australian dollar exchange rate has long been seen as a reliable response to China’s economic conditions. The Australian dollar has now rebounded by more than 7% from its June low, while prices of commodities such as oil, copper and gold have also rebounded. China also seems to be considering implementing stimulus. Last week, Changsha City unexpectedly launched an investment plan of RMB 829 billion (US$ 130 billion), and one cannot help but expect other regions to do the same. Although on the eve of the change of leadership later this year, the pace of increasing spending by the central government in China has been slow, but some local governments are now clearly ready for action. The prospect of QE3 is likely to stop decision makers and investors in Asia from thinking about it. For China, the prospect of a depreciation of the US dollar may provide an unyielding support for the sluggish export industry because the peg to the dollar determines that the RMB will also depreciate. However, the People's Bank of China may closely monitor the possibility of an increase in inflation, although the latest data show that the consumer price index rose to 2.2% in June. The rise in food prices is once again a matter of concern, especially considering that the drought in the Midwest of the United States may drive up global food prices.
The Chinese government's common complaint about the introduction of quantitative easing by the United States is that this policy has devalued the $3.3 trillion in foreign exchange reserves held by China. Most of China’s foreign reserves are held in the form of US Treasuries. This has prompted Beijing to spread its holdings of foreign exchange reserves to other currencies and hard assets. The purchase of Canadian oil producer Nexen by Cnooc, which is controlled by the Chinese government, and spent US$15.1 billion is the latest example of this policy. As far as Hong Kong is concerned, due to the implementation of the linked exchange rate system, the typical impact of quantitative easing in the United States on Hong Kong has been a rise in asset prices and inflation in other commodities. This is particularly unpopular at this point in time, because with the economic slowdown, many companies and individuals have complained about high prices. Although Hong Kong’s inflation rate has recently fallen back to 3.7% after climbing to a peak of 7% last year, there is still ample evidence of inflationary pressures. Fitch, a rating agency, said that retail storefront rentals have risen about 20% this year, exceeding the 2008 peak. Commercial real estate is particularly strong. Last year, the SAR Government introduced a special stamp duty, which is designed to impose additional stamp duty of 5% to 15% on property prices for property owners who purchase residential properties and resell them for a certain number of years. Some analysts believe that this policy has had an unexpected result, that is, the introduction of speculative funds into commercial real estate. Therefore, for the impact of the Fed's policy on the property market in Hong Kong, if you want to conduct short-term transactions, it is best to buy an office instead of an apartment. From the perspective of stock market investment, it is clear that we should invest in large-cap real estate stocks with stable performance, such as Hongkong Land, Swire Properties and Hysan. The inflation of asset prices coupled with the lag in rental growth will benefit such stocks. Although the owners of Hong Kong may welcome the third round of quantitative easing, this has caused a headache for the newly appointed Hong Kong SAR government. The current government will find that Hong Kong’s exchange rate policy has returned to attention.
The Federal Reserve Bank (FED) announced its interest rate decision in the early morning of Friday (September 14th, Beijing time) to announce the launch of the third round of quantitative easing (QE3) - the purchase of 40 billion U.S. dollars of agency mortgage-backed bonds (MBS) each month. At the same time, the Fed announced that it will extend the period of maintaining ultra-low interest rates at least until mid-2015. Driven by this positive trend, overnight risk assets rose sharply, and the U.S. dollar index once again set a new low of more than four months. The previous two rounds of QE of the Fed have all had a great impact on the fluctuation of the foreign exchange market. The QE3, whether it can be, as in the past, the gradual emergence of European debt growth, so that the exchange market usher in a new era, has become a new suspense left to the market.
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