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To: Sailing2 who wrote (231270)	9/21/2013 12:10:08 PM
From: teevee	Respond to of 313127

But except for a possible increase in inflation, not tapering and continuing to print $85 billion a month won't improve the metrics you cite either. The failure of four full years of QE, except to create a bubble in equities and pump money into the banks, is sufficient evidence you can't grow jobs or create growth just by printing money. And of course the deficits continue to grow exponentially. QE is about an inter twined web of issues: 1. The trade deficit is headed the wrong way and removes money from the domestic economy. Removing money from the domestic economy slows the velocity of money and dramatically impacts gov't tax revenues. Until the trade deficit reverses and starts heading down, there can be no tapering. 2. The Fed gov't deficit is funded by selling treasuries. Foreign trade surpluses were often parked in treasuries. Now that foreign buying of treasuries has dried up, the Fed is forced to buy them to continue funding gov't and its programs. 3. There is still at least 5 years of unwinding at least $500 trillion in derivatives which have hand cuffed banks and insurance companies. Conclusion: No tapering until trade deficit trend reverses and sovereign purchases of treasuries picks up. Tapering before hand while would negatively impact the domestic economy, pushing it towards recession and deflation again.