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Former Fed Economist David Jones on whether the Federal Reserve will take further action to stimulate the economy.
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Right meanwhile.
Major movements in the markets ahead of Thursday's likely big fed announcement US and global stocks rallying while the dollar weakened ahead of expectations the chairman Ben Bernanke.
We'll signal for yet another round of quantitative easing.
With more David Jones a former fed economist and president of DMJ advisors he joins me now.
-- it's great to CEO I'm glad to have you on the show.
You -- To be with you you said that Ben Bernanke is on the brink of providing additional accommodation.
Specifically what do you think that the Fed will do.
I think we'll see that famous QE3.
We remember we -- at this for since late 2008.
QE1 QE2.
The Fed is convinced that they will help the markets by.
Pumping even more liquidity into the markets people say as you noted earlier it could be -- sugar high but -- the Fed feels it can push rates down a little bit more even know where -- record lows and look at that stock market they're betting.
Heavily on the idea that the Fed will pump a lot more liquidity into the economy and keep that stock market going up.
Well there's the economy and then -- there's the markets right and what about the economy what about people what about jobs.
Well at a QE3 help anybody other than traders.
Well not much because I think burden neared the end of the road for the Fed.
If the Fed feels that if they push rates down a little bit and push the stock market up a little bit.
That we can see somewhat faster growth Bernanke's worried about our Fed Chairman is worried about two things we're growing too slowly.
And there's no sustained improvement.
In the labor market he referred to the labor market in his.
Recent speech out of Jackson Hole -- -- as grave.
That's pretty strong word for a Fed Chairman so.
They're -- to keep trying but your previous guest.
Is the clue here that.
That gets -- economy going again the Fed can't do much more it's all on the hands of the White House and congress with regard to this.
Fiscal cliff the only way to get real growth is to get businesses some clarity on that.
Fiscal side how much your taxes going up or are they going up -- all how much is spending going to be cut what's the regulatory picture.
What are medical costs for business -- business employees.
All of that is really the key to whether or not we can get growth.
Not so much whether the Fed does QE3 or -- not as I expect.
The union is there a downside.
To all of this -- are we gonna see inflation go through the roof.
Well there's certainly a downside in the sense that fed has been.
Artificially pushing rates down and artificially pushing stock prices up.
When they stop doing that when there's a slightest hint that they may turn around within.
Exit strategies rates are going to shoot higher and stocks are gonna come down sharply there's no question about that.
The question inflation is some day all of that money the Fed has pumped in.
Could be inflationary the poignant as were still in a very slow growth period unemployment is really high wages are really stable.
So there's no immediate inflationary threat.
Well in the meantime though savers are suffering as they have no returns on their investments right now it's been very hard for retirees for sure.
David thanks for coming on the show tonight I hope -- -- again sometime -- thank you.
Think.
