I am certain they have the best of intentions and hope to be able to reel all this bogus funny-money back in at just the right moment to preserve whatever economic activity has been spawned by the thin-air bonanza while avoiding overshooting and igniting an inflationary inferno. But history suggests that the chance of this outcome is 0%.
From here, I am expecting several things.
A continued decline in the dollar, possibly turning quite ugly at some point over the next couple of months
A continued increase in gold (but with heroic attempts to cap its price by various central banks and their proxies)
For commodity price increases to begin soon (due to a falling dollar and massive printing by Japan, the Bank of England, Switzerland, the US, and the 150 other countries that are now scratching their heads and wondering why they shouldn’t just print up a few thousand pallets of their own currencies).
Bonds will continue to behave counter-intuitively (that is, to rise in price when they should be falling)
Finally, I am expecting this latest “bold initiative” by the Fed to fail, and fail spectacularly.
More on this later as events develop. Today was a stunner. The game has now shifted to a new set of rules.
