This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Is it Fiscally Responsible to End QE2?: Opinion

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

By Noble DraKoln, CTA, Liverpool Capital Management

NEW YORK ( TheStreet) -- Forget May 21, 2011, the loudly prophesized end of the world. Ignore the centuries-old Mayan doomsday prediction of Dec. 21, 2011. Instead, look nearer and dearer to home. June 30, 2011 -- a day that will go down in history as the day the Federal Reserve Board stopped printing money.

On June 30, 2011 one of the most successful stock manipulation schemes, next to Madoff, will end -- no more Quantitative Easing: Part 2. This sophisticated chicanery is the culmination of three years of consistent indoctrination by the Federal Reserve. The Federal Reserve has made it clear, only they can save the United States from itself. Unfortunately, as with many self-appointed saviors and prophets, present and future, many outrageous claims were made. They would save homes, stimulate the economy, and bring the United States back to glory in one fell swoop.

Unfortunately, the first one fell swoop didn't work. In Nov. 2008, the Federal Reserve insisted that it would be our savior by absorbing $500 billion dollars worth of mortgage-backed securities and $100 billion in Fannie Mae and Freddie Mac debt. This didn't work. In March 2009, once the stock market hit rock bottom, the Federal Reserve attempted a second "one fell swoop" by injecting another $850 billion into the economy by purchasing more mortgage-backed securities, and Fannie Mae and Freddie Mac debt -- but with one small twist: they would add a $300 billion long-term Treasury notes and bonds to their shopping spree. Yet this still didn't work, so in Aug. 2010, it was set in stone by Ben Bernanke that another round of purchasing would save the day, Quantitative Easing Part 2 (QE2).

The plan was simple, ZIRP the lending, QE2 the economy to stimulate buying, and the VIX will be just fine. In layman's language; make sure the interest rate stays at zero (z.ero i.nterest r.ate p.olicy), use the Federal Reserve money to purchase $75 billion to $80 billion dollars a month to buy government bonds, from third parties, this would "stop the slowing of inflation"(QE2), and reduce the level of the volatility (v.olatility i.nde x.) found in the stock market. This was all done to solve a problem that didn't exist yet, but was assumed to be on the horizon. Of course, this was all for our own good.

1 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs