http://www.reuters.com/article/usDollarRpt/idUSLE65626020090314
doesn’t sound too good to me (do they really want to end up with a stagflationary scenario?) but maybe I am missing something, anybody?
No doubt someone someone will pipe up with a detailed description but until then…
Quantitative easing is basically just a fancy way of saying that new money will be created. This will have an inflationary effect, or, in other words, it will devalue your existing currency (it will decrease the purchasing power of your savings).
In England the BoE has been buying Gilts which are UK treasuries (I’m not sure what the Canadian version is). How does the BoE get money to buy Gilts? It prints it.
The Swiss sold their currency last weak devaluing it markedly. It was an attempt to arrest the 7.6% appreciation their currency has experienced over the last 6 months. Where did they get the money to sell? They printed it.
It’s all a bit of a worry because we really don’t want to see a trade war with all countries competitively devaluing their currencies.
Basically it all points to it being a good time to own gold.