Hilarious Video Explaining QE2

In case you missed it, there's a funny video going around criticizing QE2:

Since QE2 was announced, Treasury bond yields have risen by about a quarter of a percentage point, causing bond prices to fall. While that doesn't sound like much, it is causing large moves in Treasury bond ETFs. Since Nov. 2, the day before the announcement, iShares Barclays 20+ Year Treasury Bond ETF (NYSE: TLT  ) has fallen 4.8% and Vanguard Extended Duration Treasury Index ETF (NYSE: EDV  ) has fallen 8.3%. Taking the reverse trade, ProShares UltraShort 20+ Year Treasury ETF (NYSE: TBT  ) rose 9.7%. Financial stocks as represented by Financial Select SPDR (NYSE: XLF  ) were immediately up following the announcement but have since come back down.

What do you think of QE2? Let us know in the comment box below.

More QE2 Foolishness:

Dan Dzombak recommends you read The Best Investment Advice You Will Ever Get If You Have Under $100k. His musings and articles he finds interesting can be found on his Twitter:@DanDzombak. He does not own any of the stocks mentioned in this article.

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Read/Post Comments (7) | Recommend This Article (189)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 17, 2010, at 11:57 PM, marcjones281 wrote:

    the plumber is clearly smarter than the Ben Bernank!

  • Report this Comment On November 21, 2010, at 2:08 AM, mtghack wrote:

    The only valid point in the video is that CPI is not 0. Fed buys treasuries from the open market, not just GS. Therefore other banks, bond mutual funds/ETFs owned by investors should see price increases. Has QE1 worked in lowering lowering long term interest rates in 2009? Yes it has if one simply looks at the data for investment grade bonds. Unfortunately it hasn't directly translated to jobs because companies have just been hoarding cash up til earlier this year. Funny video, but serious investors who follow the market knows most of it is untrue.

  • Report this Comment On November 23, 2010, at 11:58 PM, riffdex wrote:

    "Aren't the taxes higher than a year ago?"

    The correct answer is, "No"...

  • Report this Comment On November 24, 2010, at 5:45 PM, killerpants wrote:

    lol this is hilarious

    though it doesn't take into account that deflation is dangerous because of the potential for a deflationary spiral

    demand falls, so supply falls, so demand falls, etc

  • Report this Comment On November 24, 2010, at 8:06 PM, kydderr wrote:

    I think the "ben bernanke" is definitely employed on the side by Goldman Sachs.......heaven help us all.

  • Report this Comment On November 24, 2010, at 10:45 PM, GoNuke wrote:

    In 2008 the world came very close to falling into a major economic depression. Government's everywhere took extraordinary steps to prevent this and, to a great extent, they were successful.

    The real wealth that was destroyed in the years leading up to 2008 is still gone. Government actions simply tipped the scale of economic confidence back from abject despair to a mixture of discouragement (if you are unemployed or have a big mortgage) and extremely cautious optimism (if you are an investor).

    I find it very discouraging that most people don't understand that the bailouts and stimuli worked, that we need economic growth to pay for them, that we have managed to generate some growth, and that this growth is all that stands between us and the depression that the stimuli were designed to head off.

  • Report this Comment On November 24, 2010, at 11:16 PM, showmethefacts wrote:

    Funny, yes. Filled with so many lies that it makes Fox News look fair and balanced? Well, almost.

    To deny the threat of deflation is incredibly ignorant. Ask anyone with who needs to sell their house (or God forbid, a condo), if real estate prices have gone up the last 3 years... The big lie that taxes have gone up does sound like it was lifted from some Fox "News" personality...

    The truth is that the "all regulations are bad" mantra of the Reagan-Bush2 years (a long, long time) led the nation's economy to disaster. Both political parties abetted the mindless deregulation that led to NINJA mortgages (NO Job, No Assets) and the synthetic credit default swap debacle that spread the sub-prime crisis to the world economy. No life insurance company can sell a policy without having reserves so it can pay claims -- but AIG could sell unlimited CDSs (insurance on bonds made up of tranches of sub-prime trash debt), with ZERO regulation. But of course, because regulation just strangles innovation, right? Then the Bush-Cheney admin, upon inheriting huge budget surpluses, squandered them BEFORE 9/11! on a big tax cut that let the rich and near rich pay 35% instead of the 39.6% that worked just fine when we were building those surpluses... So we had nothing to fall back on when the recession hit... The truth that the right wing especially refuses to admit is that without the bailout (Bush-Paulson and Obama-Geitner), we would have spiraled down to 1937 levels. The spending saved the economy. QE is undesirable, but the alternatives are even more undesirable. It took years of foolish policies to get us in this mess, so it looks like it will take years of muddling along with deficit spending to get us out. Bernanke should be praised not ridiculed for saving us from far worse. Even Bush deserves some credit for his bailout instead of tea party venom. Obama saved the auto industry and continued the stimulus started under his predecessor. I only wish he had spent more, on the gig infrastructure projects we need, like our Chinese rivals are doing. Hate away, Limbaugh-logic know-nothings! If you get your way, I'll see you in the bread lines.

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