Where is qe3 money going

Since the Fed began printing money in , we have seen a And we have not yet begun to see the inflationary impact which I anticipate. Both inflation and capitalization rates are the two kissing cousins of interest rates, and we can expect both to rise as inflation rises. Of course the negative externality of rising capitalization rates is a decrease in valuations of real assets which have no rent increases. This could create a deleterious impact on portfolios of real estate assets which are primarily comprised of single tenant leases with no rent increases.

This is because if these assets were purchased at a lower rate than they will be sold at, and since the net operating income remains flat, these assets will lose value, and by extension the investors in these assets will take a hit to their equity investments.

The FOMC also says that economic conditions are likely to warrant that the federal funds rate remain at exceptionally low levels through at least mid previously they had say through In addition, the FOMC will continue "Operation Twist" -- in which they sell short-term T-bills in exchange for longer-term bonds -- through the end of the year and will continue to reinvest principal from holdings that have matured back into mortgage-backed securities. Furthermore, whereas the focus of QE2 was on Treasury bonds, QE3 will focus on MBSs to try to remedy the housing market, which is finally starting to show signs of recovery.

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Investopedia requires writers to use primary sources to support their work. The impact of these measures on prices of the long-dated MBS bonds, stocks and commodities has been nothing short of stupendous.

In India, the upward movement in stock prices and bonds was aided by the sudden burst of reforms unleashed by the government to achieve a variety of economic and political objectives. Experience suggests that this kind of monetary loosening is a short-term solution, much like a band aid on a broken leg.

Its positive impact even on financial markets is short-lived. It does not lead to any significant revival of the real economy. Worse, by boosting commodity prices, it makes life harder for lots of other countries.

Printing of currency diminishes the worth of paper money and strengthens the alternative to the dollar i. It creates speculative price bubbles in oil, food and other commodities. We have seen how QE1 led to a 60 per cent increase in oil prices over a period and how QE2 saw crude oil prices go up by 35 per cent.