“Nothing to worry about. Just the potential for crushing deflation and the halt of all U.S. commerce.”
Care to give us your argument that no QE3 will cause deflation?
The absence of a QE3 will not reverse the previous debt monetization, which will continue to spur inflation for awhile. All this absurd borowing the federal government is doing will eventually lead to much higher inflation and interest rates; and the longer the fed delays that effect, the greater the effect will be.
The piper must eventually be paid. Obama knows that. I believe he wants (1) to delay the misery until after his re-election, and (2) then to have the misery destroy what is left of America’s free enterprize. His idea is to respond to the public’s plea for help with a totalitarian, Marxist state that will enforce “from each according to his ability, to each according to his needs.”
Your kids and grandkids are up the creek.
Sold down the river by a bunch of power hungry money grubbing gangsters. They will be sitting soiling themselves in their adult diapers in a nursing home somewhere someday and our kids will be picking up the ball and chain to pay for the mess these elites made for them. What kind of future is that for the coming American generations?
While the Fed and the Treasury have done everything in their power to create a real inflation, they have essentially failed.
The velocity of money is about where it was in 1930...if not the slowest ever.
These surges of printed fiat money (QE whatever) are going into what the banks and institutional players see as "safe bets"...which has been gold, oil and agricultural commodities. And the will preserve some value there.
But once the last hurrah of the last QE event has circulated through the system with a sub 1.0 velocity, everyone will turn around and find not buyers at their back, but a cold wind.
That's when the "fun" starts. The previous, natural and healthy deflation that has been put on hold by endlessly low interest rates, exotic instruments, QE and the purchase of financial assets...will be augmented by the NEW deflationary pop.
Combined with the crushing psychological despair that comes with realizing you've been screwed and lied to...and that everything everywhere is now gone...this will be a tough one.
When Bill Gross believes cash is better than treasuries...you can BET the S is about to HTF.