Quote:
Originally Posted by Yasa
Goldman Sachs is also predicting a GDP growth of 2-2½% rather than 3, and a 33% of recession again. Which brings me back to my earlier post about QE3. How much can the US possibly afford without cornering themselves even more?
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Well a GDP of 2-21/2 and a recession are two different things. While its not the cool position, the reality is the US has a debt of about 74% of their GDP....not great, but still manageable for an economy of their size. It has to be noted that as they contracted in 2008/09 that the ratio must have increased as well? The US economy will recover, and no one seems to make much of an argument against that fact....so they could afford to borrow more and embark on QE3 if they had no choice.
As for the effect it had the first two times, it was actually quite pronounced. Its a strange coincidence that QE2 ends and a few weeks later we find ourselves in this position. The needle was moving the right way through the first two rounds of QE, and these things just take time....so who knkws how mucb ground could be gained through a third round. Of course part.of the trick though is finding a time go cut the easing off, so its hard to say.