Which is why QE3 will only make matters worse.[/quote]
Well, it will make some things worse. It certainly won’t fix long term structural problems that absolutely need to be addressed. Though, it does stave off a deflationary collapse. Which, uncontrolled, is the sum of all fears for TPTB – because it would be revolutionary.[/quote]
Not so sure it staves it off. Possible that QE1 staves it off, and maybe even QE2, but the more you go into debt, the higher your interest payments. Get the interest too high and the likelihood of the deflationary collapse increases.
I’m not a fan of either the deflationary spiral or hyper-inflation theories but I do think deflation has a bit part to play yet and could come back more than once in the next few years.
I liken this whole situation to jumping off an elevator that is going up and the top floor of the building is on fire. You have to jump or you’ll burn to death and the sooner you jump (i.e. stop stimulating), the better off you’ll be but you know the landing is gonna hurt. And if you wait, the landing hurts even more.
The more QE’s that we see, the harder it gets to pay those bills.[/quote]
Nice analogy. I agree with your belief that more QE will end up making things worse. It’s best to get the pain over with quickly, and while it’s still somewhat tolerable.
