Replies

I posted the following a couple of days ago:

Well the Fed has encountered the classic Rock and A Hard Place and they are caught right in the middle.

Here are their choices:

1. Cool it with the QE stuff, refuse to fund the Federal Government deficits with Xerox Money. Result: Interest rates skyrocket, the U.S. Government will rapidly see their raising borrowing costs totally destroy Medicare, Medicade, Social Security and Obamacare. But inflation will be modest. Taxes won’t be. They will have to go up.

2. Keep issuing $Xerox and keep loaning to the Federal Government. Interest rates stay low. Employment slowly improves. Gold goes from $1400 to $5000 plus per ounce. Your house that was underwater at $150,000 is now going for $500,000. What’s not to like? That retirement fund you set up that was supposed to last 20 years will be gone by Chrismas? Well there is always a little collateral damage when you are doing big things with the economy. Oh, and yes, the Federal debt goes from $14 trillion to 2-3 times that in 10 years. The Government concedes that they will never be able to balance their budget. But who cares? If you lucky enough to have job it’s ‘Let the Good Times Roll’ all over again.

I’m betting the Fed will take Option 2.