Yesterday we demonstrated that the same 'whip into a frenzy' talk of QE occurred just as zealously in September 2011 as it is currently now.
Bernanke, as much as we despise the man, is not a stupid person; the devil must always get their due. He understands Behavioral Psychology and plays it perfect.
He knows all he needs to do is push the rumor or tease the anticipation of QE3 to get the markets jumping and sociopath Investors & traders peeing in their pants for joy.
Its called Operant Conditioning-- something learned in Psychology 101 with the example entitled 'Pavlov's Dog'. Pavlov studied behaviors and in his famous test, he would show food to a dog which would provoke a response of the dog salivating in anticipation of the food.
Then a tuning fork was used each time the food was shown to the dog, which would trigger the same response-- drooling. In time, the fork would replace the food altogether and all it took for the dog to salivate was the ringing of the fork
Bernanke is Pavlov; the Investors appropriately enough, are the 'Dog'.
Today we're going to do another fun quiz but it will be different from yesterday's. Rather than have you guess the year, we will provide specific quotes regarding QE3 from reliable news sources, and provide you multiple choice as to when it was written...
If you get them all correct, give yourself a hug..
If you get them all wrong, give yourself a butt-slap...
1) "The National Inflation Association (NIA) today released the following article to its members: 'The brand new breakout in the price of gold leads us to believe that the Federal Reserve is getting ready to unleash QE3... If the Federal Reserve doesn't implement QE3, NIA believes it will just about guarantee a bursting of the U.S. bond bubble'" --TheStreet.com
Guess the date that was written:
a) June 7, 2012
b) April 6, 2011
c) March 21, 2012
Answer: B- April 6, 2011
2) "QE2 is due to run out this summer. Unless you think we're creating so many jobs in a few months, that it's obvious that we're on the right track to full employment, then more QE seems in the cards." -- Business Insider.com
Guess the date that was written:
a) May 14, 2012
b) April 1, 2011
c) February 3, 2011
Answer: C- February 3, 2011 (19 months, 9 days ago)
3) "Ben Bernanke put markets on notice this week: Despite already having spent trillions of dollars to stimulate growth, the Federal Reserve would do more if inflation falls too far and the threat of deflation grows." -- Reuters
Guess the date that was written:
a) September 29, 2011
b) March 3, 2012
c) June 22, 2012
Answer: A- September 29, 2011
4) Gold Prices Flirt with $1,600 on Hint of QE3 -- "Gold and silver popped Wednesday as investors piled into the safe haven metals after the Federal Reserve hinted at more quantitative easing. In the latest FOMC minutes released Tuesday, certain Fed policymakers expressed their willingness to consider QE3 if inflation dropped and unemployment stayed high." -- TheStreet.com
Guess the date that was written:
a) July 7, 2012
b) July 13, 2011
c) December 20, 2011
Answer: B- July 13, 2011
5) "Federal Reserve policymakers left the door open to another round of asset purchases in the near future, according to minutes of their most recent meeting... the possibility of a third round of asset purchases, known as quantitative easing or QE3, is still very much alive." -- CNN/Money
Guess the date that was written:
a) January 4, 2012
b) August 5, 2012
c) October 12, 2011
Answer: C- October 12, 2011
6) "The Federal Reserve didn’t announce any quantitative easing measures in its latest statement, but the probability of QE3 is still inevitable... The Fed recognized that the economy is weakening and the committee said downside risks to the economic outlook have increased...." (MarketWatch.com)
Guess the date that was written:
a) December 5, 2011
b) August 1, 2011
c) August 2, 2012
Answer: B- August 1, 2011
7) "Federal Reserve Chairman Ben S. Bernanke laid the groundwork last week for a third round of so-called quantitative easing, or QE3, saying that the Fed is prepared for further “accommodation.” The central bank, which bought $2.3 trillion of debt as part of QE1 and QE2, also reiterated a commitment to keep rates low until at least 2014."
Guess the date that was written:
a) June 8, 2012
b) May 30, 2012
c) January 20, 2012
Answer: C- January 20, 2012
So how'd you do? No matter the score, you get the gist...
QE3: One long, endless Pavlovian tuning-fork tease that no one in a position of power can seem to stop or wish to try
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