If the Fed tries to end this properly, interest rates will shoot up and the Federal government would quickly use up revenue on interest payments and part of the entitlements. But the longer they do it, the worse the outcome. They probably just hope to get a big enough bubble of some sort where they can sell off assets and perform a currency devaluation with the support of governments and unions.
The Fed has no recourse at this point, to "end things properly." It's spent all its bullets already, and no longer has ammunition....
QE is the "price support program" for federal debt. Aggressive buy-ins by the Fed of federal debt securities — using magically appearing "money" — supports the price of federal bonds in the marketplace.
In the "real world," this sort of thing would be regarded as "self-dealing in one's own securities," which is a federal crime. In a private company, the management presiding over any such state of affairs would be dragged out from their offices in handcuffs, and thrown in jail.
Notwithstanding. The Fed's object is to keep the bond price effectively at "par," so to produce a [current] yield of practically zero percent — which punishes savers, because it is a "negative rate of return," after adjusting for inflation.
Evidently the Fed is saying that they will keep effective interest rate to an effective return of zero percent on capital as long as it takes the unemployment number to reach 6.5 percent. They stopped caring about the prospects of extreme future inflation a long time ago....
Bottom line: What the Fed has been doing is to shore up the price of federal debt obligations — long-term bonds especially, but also with a hat-tip to Fannie Mae and Freddie Mac — to absorb, at phenomenal taxpayer expense, from now as far as the eye can see — every piece of trash security that has ever been issued by the federal government or an entity under its auspices during the past five years at least, all to pay for the incorrigible "sins of the past." I.e., government promises made that could in no way ever be satisfied. And the "Lawgivers" knew it at the time.... E.g., the entitlement programs generally.
Thus the unprecedented "wealth transfer" alluded to in my last: Accounts must be settled, one way or another.
[Read the article. Do the math. ]
As if parsimonious Nature could ever forgive such gratuitous abuses....
Thanks so much for writing, palmer!