People have been speculating about the prospects for QE3 since before QE2 even got off the ground.
And with the recovery sputtering and stocks plummeting, the drumbeat has gotten even louder. It helps that Jackson Hole — the conference where Bernanke announced his plans last year — is right around the corner.
And now the talk begins for real. WSJ’s crack Fed Report Jon Hilsenrath interviews some former Fed officials (Donald Kohn, Vincent Reinhart and Brian Madigan) and finds growing support for QE3 IF inflation comes down.
And inflation seems to be plummeting everywhere (oil is below $92, all the prices paid components of various surveys are dropping like a rock, etc.).
It still might be a while before we hear chatter straight from the horse’s mouth, but if former Fed officials are thinking it, so too are those on the inside.
Since the news flashed over the wires markets have staged a huge rebound. The Dow is nearly flat. NASDAQ is up 0.4%. At one point the Dow was down 150.