What is QE3, And Why Does it Matter?
There has been a lot in the news lately about Quantitative Easing round 3 (QE3), and many Americans have wondered what QE3 is, and how is it going to affect them?
Simply put, in effort to keep interest rates low, the Federal Reserve is planning on buying $40 billion a month in mortgage-backed securities. The idea is that low interest rates will encourage more individuals to borrow money, and will stimulate the economy.
This will be the third time in recent years that the Federal Reserve has announced a Quantitative Easing plan, the first being in December 2009 (QE1), and the second in November 2010 (QE2). The biggest difference between QE3 and the other two rounds is that QE3 doesn’t have a specific time frame; it is open-ended meaning it could go on indefinitely.
Is QE3 a good or bad thing?
The answer to this question is not quite that simple. The supporters of QE3 believe it will stimulate the economy, which will ultimately bring down unemployment, both of which are good things. Additionally, individuals looking to borrow money will be able to get low interest rates, which also sounds like a good thing. The question is, are the assumed benefits of QE3 worth the cost?
Critics of QE3 are concerned that the additional $40 billion a month will devalue the dollar because the Federal Reserve is essentially “printing” more money to cover the cost. Inflation is a direct result of a devalued dollar. Additionally, critics are concerned that the artificially low interest rates will increase the perceived value of homes, causing a second housing bubble, which will inevitably crash and prolong the recession.
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What are your thoughts on QE3? Please share below.
8 Replies to “What is QE3, And Why Does it Matter?”
Hi there. As a mom of a young child (2 yr old), I worry about his well-being in the event of having to “bug out” from our home. Are the freeze dried foods safe for young children?
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we live in alaska, on a island. Need ,oats, flour,salt, beans, powder milk wich way would be affordable?? linda
You can contact one of our Emergency Preparedness Specialists at email@example.com, or 1-866-946-8366. They will be able to help you determine which option is best for your family.
From what I understand, QE 3 is not good in the long run and is just another stop gap (at least until after the election) measure that does not really fix the problem, but puts off the real fix that our economy needs. It makes our dollar worth less, meaning that we have to spend more money to buy the same things. With our stagnant economy and stagnant incomes for those fortunate enough to have jobs right now, and for those on fixed incomes, that means that we will have to lower our living standards yet again. Who thinks that is a good idea? America is quickly becoming at least a second-world country under the present administration. Do we want our living standards lowered any more, especially while Washington spending is still out of control. Please get out and vote on or before election day for a change in administrations to save our country.
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Ok, in light of QE3, what should we be doing. I’m new to emergency preparedness and just bought your backpacks. I love them. I like the idea of adding toilet paper, I think it needs an emergency survival blanket. Thanks for good products and good info.
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The damaging thing QE3 and QExx will bring is inflation. No country has monetized their debt and not experience inflation. To prepare buy some gold or silver or some other hard asset that will not lose its value because our currency is trashed. Once the crash is almost over, which won’t happen until the present nonadministrative is replaced with one that has a conservative fiscal policy then start selling back your gold or silver and invest in stocks. This is a trivial answer but has the basic idea of a bubble economy caused by QE or monetizing our debt. Read ‘Aftershock’ by Wiedemer et al for more details. Most of all have faith in yourself that you will be able to cope with any disaster if you prepare mentally for it. Everyone will forget something but if you have the basics you will be ok.
Great insights George, thanks for sharing!