GOP set to attack "twist" on QE

September 20, 2011 07:00 PM

It went on to say, “It is not clear that the recent round of quantitative easing undertaken by the Federal Reserve has facilitated economic growth or reduced the unemployment rate. To the contrary, there has been significant concern expressed by Federal Reserve Board Members, academics, business leaders, Members of Congress and the public. Although the goal of quantitative easing was, in part, to stabilize the price level against deflationary fears, the Federal Reserve’s actions have likely led to more fluctuations and uncertainty in our already weak economy. We have serious concerns that further intervention by the Federal Reserve could exacerbate current problems or further harm the U.S. economy. Such steps may erode the already weakened U.S. dollar or promote more borrowing by overleveraged consumers. To date, we have seen no evidence that further monetary stimulus will create jobs or provide a sustainable path towards economic recovery.”

The Democrats were appalled so much so that Senator Charles Schumer, "a heavy-handed attempt to meddle in the Fed's independent stewardship of monetary policy" and said it should be "ignored by Chairman Bernanke and the Fed's policy makers."

What can't be ignored by oil traders is the possible impact on oil prices. As I wrote before that while QE1 and 2 has an almost immediate impact on prices by devaluing the dollar and increasing demand in the emerging markets where commodities after QE seem to go on sale. The twist it is hoped will have a softer impact as the longer term commitment of capital will not impact demand. Unless of course the market focus on the value of the dollar and that will be the key. The other downfall may be the fact that the yields in the short end of the curve are so low that the long end may not inspire the type of long-term activity hoped for like buying homes and building factories.

Phil Flynn is senior energy analyst for PFGBest Research and a Fox Business Network contributor. He can be reached at (800) 935-6487 or at

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About the Author

Phil Flynn is a senior energy analyst at The PRICE Futures Group and a Fox Business Network contributor. Phil is one of the world's leading market analysts, providing individual investors, professional traders, and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline, and energy markets.