Yes, the Fed is printing money to paper over the deficits, as the annual deficits we are running up now exceeds the world’s capacity, and increasingly the world’s willingness, to finance it. So we have to print money to ourselves. By putting it into the bond/stock markets, the Fed is counting on using those markets as “reservoirs” to hold the money out of circulation, which is the only thing keeping us from Weimar Republic-style turbo-inflation. They are creating the next bubble, in fact, they are counting on creating a bubble. When the bubble bursts and goes “poof” all the value disappears, and it’s as though they never printed the money to begin with.
I think that’s the strategy anyway. Looks good on paper, even if its worthless paper.
The thing is, the fed isn’t printing money. They’re telling government it’s okay to put some magic numbers into the computer, out of thin air, and it’s “spent” for stuff the government can’t afford. Then, for some reason I can’t comprehend, it’s a debt that has to be paid back. Why don’t they just pay the bills and not “pay it back”? Either way, it’s make believe. Except their way, the rich get richer, forever.
That's the good news. The bad news is Federal interest payments will rise from 2% now to 10% or more. That means we will pay a trillion instead of 200B for interest which suck down 1/2 or more of tax revenue since that revenue will plummet.
A second bit of bad news is most major banks struggle or croak since their carry trade income goes away along with the mortgage machine money. But that's good in the long run.