InvestorJabber: Swonk talks rationale behind QE2
Swonk’s analysis uncannily mirrors our view of QE2 – the Fed has no choice, but to inject massive stimulus into the market as a way to fulfill its dual mandate of combating high unemployment and moderating inflation.
The new possibility that QE2 could include a total $1.5 trillion illuminates the drastic nature of anemic growth. 2-3% US GDP is not enough to bring down unemployment with the chance that it remains at 9.5% a year from now.
Coordinated efforts from global central banks should provide further resolve and confidence into the market, despite the ‘incremental’ language from Bernanke.
We are convinced that the Fed will go to any length to reignite economic growth, even at excessive costs. Their motto should remain “Growth now, austerity later,” for as long as it takes to get the economy back on track.
