Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update highlights the possibility of more quantitative easing.
- There could soon be another round of quantitative easing to help prop up the economy and stop the bleeding of the stock markets. The Federal Reserve would in essence be printing money to buy government borrowing needs.
- This would mark a third round of quantitative easing. It is an unprecedented policy in the U.S. first done in response to the financial crisis of 2008 which tipped the economy into a deep recession. So far about 1.2 trillion in fresh greenbacks have been printed to buy government and mortgage debt. If there is another round, then the amount will likely be in the 300 to 500 billion.
- In theory, this action should provide liquidity to at least help the stock market. The boost in stock market wealth then will supposedly lead to an increase in consumer spending and business investments.
- The side effect, however, is an increased risk of inflation. The end result could be equivalent to pulling on a string with no genuine help for the economy. Gold prices and other commodity prices, including farm produce and farm land prices, are expected to go higher as people seek inflation protection.
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