The Tapering Off Of Qe Iii

751 words - 4 pages

The Impacts of The Tapering Off of QE III

In June of 2013, at the Federal Reserve’s Policy meeting, Chairman Ben Bernanke announce the Fed’s plan to eventually taper off Quantitative Easing (QE) III sent investors and economic analysts into a panic. Bernanke tried to effectively explain the reasoning behind their decision to taper QE, but all that was heard by the market was were their intention to tighten the money. This news is so unnerving to the market because they believe it will only lead to substantial market and economic disruption. During the next couple of days following the June meeting, the market went crazy as stocks dropped by 4 percent and many ...view middle of the document...

This is because as deflation rises the real return on cash rises as well. As a result of this the demand for goods will decrease which will act to increase the deflation as well. The next impact on the economy is that when deflation occurs as rapid as this, the real burden of debt will rise for households, firms, and the federal government. This will also lead to higher incidence of default, which will ultimately deplete the assets, ability, and willingness of lenders. Lastly, if the Fed tapers QE then the labor markets will suffer and the unemployment rate will increase. Because of the deflation, wages will fall slower than prices will which will reduce the demand for labor. Recently real wage growth has been slowly increasing nearing zero and employment growth has been very slow. Deflation will just cause real wages to grow faster and for employment to suffer a faster decrease in growth.
There are a lot of potential outcomes of the tapering of Quantitative Easing and they all point into the direction of deflation given the current state of the economy. In theory, if the economy was under ideal conditions, then the taper of QE would point to bond yields to be higher and that the yield of short-term securities would be expected, on average over the horizon, to be...

Other Papers Like The Tapering Off Of Qe Iii

Finance Essay

3799 words - 16 pages U.S. government auctions off leases on tracts of land in the Gulf of Mexico. Oil companies bid for the right to explore each tract of land and to extract oil. c) Ye Olde Country Club charges golfers $12 to play the first 9 holes of golf on a given day, $9 to play an additional 9 holes, and $6 to play 9 more holes. d) The telephone company charges you $0.10 per minute to make a long-distance call from Monday through Saturday and $0.05 per minute on

A Guide To Running Your First Mararthon

909 words - 4 pages . The purpose of this last phase is to get to the starting line on race day in top physical shape. Tapering usually occurs during the last four weeks of training. Tapering is accomplished by gradually reducing mileage by up to eighty percent while maintaining speed work. Rest during this phase is very important. Allow the body time to make up for all the hard training it has to do up to this point. Take time to prepare for race day. Deciding

Essay Papers

453 words - 2 pages Easy Probability Problems 1 A class consists of 13 boys and 17 girls. If a student is chosen at random from the class, find the probability that the student is (i) a girl, (ii) a boy 2 A card is drawn from a full pack (with no jokers). Find the probability that the card chosen is (i) a red card, (ii) a diamond, (iii) a spade, (iv) the ace of clubs. 3 A letter is chosen at random from the word PARALLEL. Find the probability that the


4090 words - 17 pages starting the load process. Age of Empires III does not support the use of this feature. For better game performance, it is advised that you turn this feature off. · · O. Multiplayer Troubleshooting · · Performance—The following guidelines are recommended for a good multiplayer experience: · · 8 Players - Greater or equal to a P4 3.2 GHz, 2 GB RAM, and Cable/DSL, LAN · 6 Players - Greater or equal to a P4 2.8 GHz, 1 GB RAM, and Cable/DSL

Fan Noli

2586 words - 11 pages e Kolonjës. I ati i tij, Stiliani, ndonëse trashëgoi tokë si pronë, nuk u mor me bujqësi, por shërbeu si psalt në kishën e fshatit. E ëma, Maria, ishte shtëpiake. Familja u shtua shumë dhe erdhi një kohë që jetesa u bë e vështirë për të. Sa qe i mitur Noli hoqi sëmundje të rënda, prandaj shkollën e nisi me vonesë. Shkollën fillore dhe të mesme i kreu në gjuhën greke në Heybeliada, Stamboll. Gjithsesi, tek ai ndikoi më shumë krenaria e fshatit

Physical Geology Written Assignment 1

757 words - 4 pages poles. This is because the Earth’s field isn’t 100% dipolar. It is believed that the source of the Earth’s magnetism is the liquid metal in the Earth’s core (Carlson, Plummer & Hammersley, 2009). 4. Differentiate between seamounts, guyots, and aseismic ridges. Seamounts are undersea mountains that are tapering in shape. They are 3,280 feet or more above the sea floor. Some rise to sea level and form islands. They are in various places along

Hp Compaq

1001 words - 5 pages server ii. Merger will expose HP as PC popular computers, diluting its printing business iii. Deal could double the size of iii. Difficult to merge such two large HP¶s repair-business. firms Strengths and Weaknesses HP Strengths i. Imaging and printing system ii. Strong reputation for innovation and quality iii. Strong in UNIX servers. Weaknesses i. Declining growth of PC market ii. Weak in server market that has profit

Natalee Holloway Speech

1263 words - 6 pages to officials that he left Holloway asleep on the beach. The evidence of this statement was so vague and unclear however could possibly be true. Van Der Sloot stated he dropped Holloway off to sleep near the fisherman’s docks that night. TRACEY CITATION** On a side note, Tracey Allen, whom visited Aruba one week before Natalee Holloway was taken said she woke up early one morning to get a relaxing run on the beach. She stated how she passed the


2456 words - 10 pages )                                           i.    Default = partnership 7701-3(b)(1)(i) 1.     Applies to LLCs 2.     To opt out of default  Check-the-box 3.     Look to state law; If state law corp = corp for tax 7701-2(b) b.     One Member: Corp or DRE 7701-2(a)                                           i.    Default = Disregarded entity 7701-3(b)(1)(ii) 1.     If state law corp = corp for tax 7701-2(b) 2.     SMLLC can’t be Pship = DRE III.    Reclassification a


1651 words - 7 pages tapering is relative to the increases in consumer spending and confidence. The increase was evident in the BLS report as consumer confidence reported a positive increase of 67, in 2012. Under the current economic conditions, the Fed is anticipating ceasing its expansionary policies in 2014. Through its policies, the Fed has effectively shifted the aggregate demand curve increasing both demand and supply of economic goods. With near zero interest

Sample Cmultiple Choice About Wire Splicing

444 words - 2 pages the main wire. a. Wrapped Tap or Tee joint b. Cross joint c. Duplex cross joint d. Plain tap joint 4. This is the proper sequence in making a rat tail or pig tail splice accordingly. I. Tightened the twisted end using a plier. II. Twist the wires about 5-6 turns. III. Unskinned one end of the wire. IV. Place the two wires in cross position. a. I,II,III, and IV b. III,IV,II, and I c. II,I,III

Related Essays

If The Nations Of The World Were To Suddenly Cut Off Trade

2161 words - 9 pages 12 Globalization and International Trade “Globalization” refers to the growing interdependence of countries resulting from the increasing integration of trade, finance, people, and ideas in one global marketplace. International trade and cross-border investment flows are the main elements of this integration. Globalization started after World War II but has accelerated considerably since the mid-1980s, driven by two main factors. One involves

1. Do You Think There Is A Trade Off Between The Positive (High Performance) And Negative (Increased Stress) Effects Of Stretch Goals?

324 words - 2 pages 1. Do you think there is a trade-off between the positive (high performance) and negative (increased stress) effects of stretch goals? Setting goals is part of organizational life and a powerful way to keep employees aligned and clear about expectations. But how tough should the goals be? How high should you set the bar? Some leaders like to set goals at a low to moderate level, based on the concept that they want everyone to be successful

Quantitive Easing Essay

2258 words - 10 pages spending tens of billions of dollars a month to "maintain downward pressure on longer-term interest rates, support mortgage markets" and promote economic recovery. What happened Months before tapering began, mortgage rates rose in anticipation. When the announcement finally was made in December 2013, mortgage rates rose for a couple of weeks. They have declined since then. In the brief time since tapering began, the effect on home prices can't

Student Essay

1632 words - 7 pages the country’s exports of the product; then P x d s Elasticity of Export Supply and the Domestic Demand and Supply Elasticities The export-supply elasticity of a given product is positively related to the domestic demand and supply elasticities and negatively related to the share of exports in domestic production and consumption. Remembering that the volume of exports (Qe) is the difference between the quantities supplied and demanded