Empty Punchbowl? Solution QE

Somebody remarked yesterday that Bernanke is going to announce a 2 trillion dollar QE3 on Friday. My question is why just 2 trillion and not 3 or 4. Why not announce that until the US GDP grows at 3% per annum we will continue to buy the US Treasury bills. If we are any way going to continue to print Dollars, then why stop at 2 trillion. Why announce a QE3 as if that was the last of the QEs we are going to see. Why not call it a QE unlimited or a QEinfinite or something to announce to the world that we will not stop until the current problem and while we are at it all potential problems are also solved? I am hoping he says something to that effect because then I might see my Gold longs hit limit up! Would that not be something to look forward to? It might even end up inflating equities along with all other asset classes.

However, if better sense prevails and Bernanke announces that the party is over, then we might see a fall in equities in the short term as expectations of the market are belied. But then this expectation in any case is the clamor of the drunk party hards for liquor and music even as the party ends. It is not the demand of the sane. Just because boozed up party goers demand liquor, does not mean it is the duty of the party thrower to supply unlimited quantity of the same. In fact it is his job possibly to remove the punch bowl before everybody indulges in so much excess that all that is left to do is to clean up the body fluids that will inevitably be thrown up.

The end of all QE programs could possibly even allow the markets and economies to work out the hangover of the party of the last decade. Hangovers are painful but it is best to get it done and over with so that some time in the future one can party once again. I am not so hopeful though. Super Ben is nothing if not tenacious. He will unleash his QEs once again and keep the party going. The punch bowl is going to be filled up once more. The party hards can once again have their fun.

If you remember your hard drinking party days though, you will remember that one cannot drink forever. Sometime the body passes out! And before you pass out reading this interminable note, let me remind you that I am currently short and will cut my short positions only if the Nifty futures trades above 4975.