The stock market is benefiting from the “stable” environment created by the Fed. However, the DIRECT beneficiary of the Fed’s actions is the Bond Markets. The Fed is making the market for Treasuries. There would be Hell to pay throughout the financial markets if Treasuries faced a failed auction.
In short, the Fed is monetizing the debt—buying the debt created by massive deficits.
Since the money supply has increased so much, shouldn’t we be seeing major inflation in the economy?
Or, are we not seeing inflation because the economy is so weak?
If money is being created out of thin air, money which is not backed by any tangible assets, isn’t it predictable that inflation will happen at some point??
The Fed hasn't added to their balance sheet since October 2014.