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Notes to myself, possibly of interest to others.
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Thursday, November 11, 2010

Grantham says Fed inflating assets with QE2

Grantham agrees with Markman, below.  The Fed now is trying, and succeeding, and has succeeded in the past, to inflate assets (stocks mainly), in order to achieve a wealth effect and make the rich feel better so they go out and spend.  G says that just as before, this QE2 inflation of assets will end badly.  This video of him, courtesy of Ritholtz, is a great companion to his (G's) October letter referenced here and below under "stimulus".

Grantham envisions the S&P getting to about 1500 under QE2, then crashing by half-ish to 950 or so, similar to what happened in the crashes of 2000 and 2008 - This all in about two years.

He thinks overall the next decade will be muddle-through, with 2% or so growth.

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