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November 5, 2010

The True Purpose Of QE2 Is To Disguise The Decreasing Ability Of The Treasury To Finance Its Debts

At the end of the day, all the deflation talk is a red herring. As global demand for dollar-denominated debt falls, the Fed is looking for an excuse to pick up the slack. The true purpose of QE2 is to disguise the decreasing ability of the Treasury to finance its debts.

By announcing QE2, it the Fed can monetize government debt without the markets perceiving a funding problem. If the truth were known, a real panic would ensue. So, the Fed pretends buying treasuries is simply part of its master plan to boost the economy, even though, in reality, it is simply acting as the buyer of last resort.

in Schiff`s Weekly Commentary

Related ETFs: ProShares UltraShort 20+ Year Trea (ETF) (NYSE:TBT) and iShares Barclays 20+ Yr Treas.Bond (ETF) (NYSE:TLT)

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.
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