The most recent employment report was good and the market is worried. Will there be a fast or slow demise of quantitative easing by the Federal Reserve? Basically the market is worried that in response to an improving economy the US Federal Reserve will stop buying US Treasury Bonds. This prospect has already driven interest rates higher. The chairman of the Fed, Mr. Bernanke, has promised a slow demise of quantitative easing based on the rate of improvement in the economy. Nevertheless, the market, which discounts information as soon as it is available, is concerned that a too-rapid cessation of the Fed stimulus program will 1) send the economy back into recession, 2) or drive gold prices down, 3) or drive oil down in the US and higher elsewhere, 4) or drive the dollar higher. To start fundamental analysis of the prospect of a fast versus a slow demise of quantitative easing let us start with just quantitative easing really is. Quantitative Easing When the worst recession in three quarters of a century occurred luck would have it that Ben Bernanke was already the chairman of the US Federal Reserve. Mr. Bernanke is probably the world’s greatest expert on the causes of the Great Depression. The short answer to why the Great Depression occurred is that the government of the USA tightened credit when it should have eased it, started a trade war, and failed to find ways to stimulate the economy. When confronted with a possible re-run of the Great Depression on a much worse scale the US Federal Reserve and then other central banks initiated Quantitative Easing. This policy involves buying financial assets from commercial banks and other private institutions which in turn increases the monetary base. In addition, the Fed has been buying $85 Billion in treasury bills each month. This has driven interest rates down, soaked up the bond supply, and sent bond investors into the commercial bond market for investments. Quantitative easing has reduced interest rates and increased the value of pre-existing bonds. The general consensus is that Quantitative Easing has helped the US economy, and the world, avoid another Great Depression. But, now the prospect of a slow demise of quantitative easing has markets concerned. Now what do sound stock investing principles say about the slow demise of quantitative easing?

1. Slow Demise of Quantitative
Easing
By: www.ProfitableInvestingTips.com

2. The most recent employment report
was good and the market is worried.
Will there be a fast or slow demise of
quantitative easing by the Federal
Reserve? Basically the market is
worried that in response to an
improving economy the US Federal
Reserve will stop buying US Treasury
Bonds.
By: www.profitableinvestingtips.com/investing/slow-demise-of-
quantitative-easing

3. This prospect has already driven
interest rates higher. The chairman
of the Fed, Mr. Bernanke, has
promised a slow demise of
quantitative easing based on the
rate of improvement in the
economy.
By: www.profitableinvestingtips.com/investing/slow-demise-of-
quantitative-easing

4. Nevertheless, the market, which
discounts information as soon as it
is available, is concerned that a
too-rapid cessation of the Fed
stimulus program will:
By: www.profitableinvestingtips.com/investing/slow-demise-of-
quantitative-easing

5. 1) send the economy back into
recession
By: www.profitableinvestingtips.com/investing/slow-demise-of-
quantitative-easing

6. 2) or drive gold prices down
By: www.profitableinvestingtips.com/investing/slow-demise-of-
quantitative-easing

7. 3) or drive oil down in the US
and higher elsewhere
By: www.profitableinvestingtips.com/investing/slow-demise-of-
quantitative-easing

8. 4) or drive the dollar higher
By: www.profitableinvestingtips.com/investing/slow-demise-of-
quantitative-easing

9. To start fundamental analysis of
the prospect of a fast versus a slow
demise of quantitative easing let us
start with just quantitative easing
really is.
By: www.profitableinvestingtips.com/investing/slow-demise-of-
quantitative-easing

10. Quantitative Easing
By: www.profitableinvestingtips.com/investing/slow-demise-of-
quantitative-easing

11. When the worst recession in three
quarters of a century occurred luck
would have it that Ben Bernanke
was already the chairman of the US
Federal Reserve. Mr. Bernanke is
probably the world’s greatest
expert on the causes of the Great
Depression.
By: www.profitableinvestingtips.com/investing/slow-demise-of-
quantitative-easing

12. The short answer to why the Great
Depression occurred is that the
government of the USA tightened
credit when it should have eased
it, started a trade war, and failed to
find ways to stimulate the
economy.
By: www.profitableinvestingtips.com/investing/slow-demise-of-
quantitative-easing

13. When confronted with a possible re-
run of the Great Depression on a much
worse scale the US Federal Reserve
and then other central banks initiated
Quantitative Easing. This policy
involves buying financial assets from
commercial banks and other private
institutions which in turn increases
the monetary base.
By: www.profitableinvestingtips.com/investing/slow-demise-of-
quantitative-easing

14. In addition, the Fed has been
buying $85 Billion in treasury bills
each month. This has driven
interest rates down, soaked up the
bond supply, and sent bond
investors into the commercial
bond market for investments.
By: www.profitableinvestingtips.com/investing/slow-demise-of-
quantitative-easing

15. Quantitative easing has reduced
interest rates and increased the
value of pre-existing bonds. The
general consensus is that
Quantitative Easing has helped the
US economy, and the world, avoid
another Great Depression.
By: www.profitableinvestingtips.com/investing/slow-demise-of-
quantitative-easing

16. But, now the prospect of a slow
demise of quantitative easing has
markets concerned. Now what do
sound stock investing principles
say about the slow demise of
quantitative easing?
By: www.profitableinvestingtips.com/investing/slow-demise-of-
quantitative-easing

17. Interest Rates Are Going Up
By: www.profitableinvestingtips.com/investing/slow-demise-of-
quantitative-easing

18. As the need for the Fed to
perpetually dump money into the
US economy fades away and bond
purchases diminish, interest rates
will go up. Bond investors are
already dumping low yield bonds
and holding cash while they wait to
re-invest at higher rates.
By: www.profitableinvestingtips.com/investing/slow-demise-of-
quantitative-easing

19. The Dollar Is Rising
By: www.profitableinvestingtips.com/investing/slow-demise-of-
quantitative-easing

20. Higher US interest rates drive up the
value of the US dollar in the Forex
market. This reduces the cost of
foreign goods as well as foreign
investments. One may consider
investing in foreign stocks as they
become cheaper. You may wish to take
a look at our article about three good
offshore investment ideas.
By: www.profitableinvestingtips.com/investing/slow-demise-of-
quantitative-easing

21. Increased Import and the Long
Term
By: www.profitableinvestingtips.com/investing/slow-demise-of-
quantitative-easing

22. Gold is heading downhill as
interest rates rise. However, a
stronger dollar will likely attract
more imports and continue to
erode the US balance of payments.
By: www.profitableinvestingtips.com/investing/slow-demise-of-
quantitative-easing

23. True gold bugs do not speculate on
the short term rise and fall in gold
prices but rather on the slow and
steady rise of gold against a
steadily devalued dollar.
By: www.profitableinvestingtips.com/investing/slow-demise-of-
quantitative-easing

24. Over the long term the slow
demise of quantitative easing could
bring gold and make it profitable
to invest in gold as it bottoms out
in the near future.
By: www.profitableinvestingtips.com/investing/slow-demise-of-
quantitative-easing