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US to Decide on More Money-Printing in 2012: Gartman

The chances of a third round of quantitative easing in the US this year have faded to "bordering on nil", unless jobs figures get much worse, Dennis Gartman, author of The Gartman Letter, told CNBC Thursday.

On Wednesday, minutes from the Federal Open Market Committee September meeting showed that the committee of twelve policymakers leading the Federal Reserve discussed a third round of quantitative easing, and at least two members said the weakening economy might need it.

United States Federal Reserve
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United States Federal Reserve

There were also three members who objected to the Fed taking any new measures at all.

Gartman thinks that a firm decision will be left until next year, when the composition of the committee will change again, unless unemployment in the US, which is currently hovering at around 9 percent, rises to 10 percent. Five of the twelve positions on the committee are rotated between the US's reserve banks annually.

"The Fed might have one more dove next year but we won't know that until the first meeting, in January," said Gartman, who said last month that QE3probably wouldn't happen until October or November.

"There's a great deal of confusion within the Fed and that's when people do nothing and wait. That's what you got out of this last meeting, except for this rather strange Operation Twist, which wasn't unanimously agreed."

Worries About Inflation

There are concerns that further quantitative easing may cause rising inflation, at a time when US consumers are already facing squeezes on their incomes and increased job insecurity.

Despite two rounds of quantitative easing in the US since the credit crisis began, there are still disagreements about whether it has been effective in the real economy.

Many analysts have pointed out that it has so far has not trickled down to tackling unemployment or helping manufacturing.

"The major reason why equity markets in 2009-10 did so well was because of QE," Simon Derrick, Chief Currency Strategist at BNY Mellon, told CNBC.

"I'm not sure if anybody knows whether it helped or not," said Gartman. "There's a dichotomy of opinions within the Fed itself. There's no unanimity over whether it helped."

"The money is created, for want of a better word, it makes its way into the banking system and it just lies there," he added.

"It was hoped when the QE program was undertaken that it will find its way into plant and equipment, but until that happens it isn't making its way into plants or labor, but into stock prices."

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