These people are literally insane. I use that word intentionally, and not for dramatic effect. They're truly insane. They should be drawn and quartered.
Check Quantitative Easing explained: http://www.ft.com/cms/s/0/8ada2ad4-f3b9-11dd-9c4b-0000779fd2ac.html
You know what, I'm beginning to think that the worst case scenario isn't hyperinflation. There is going to be a mad dash to sell anything and everything and this deflationary spiral is going to be the end of our economy. Sure bread might be $12/loaf at the store but people will stop buying it because it's too expensive. The bread manufacturers will lay off people and the debt %/GDP will continue to soar even as the spending decline. The scamble for $s to repay debts absorbs all the liquidity!! We won't be able to extend credit anymore and the fed will be left with the entire economy on its balance sheet with no bid on anything.
I remember hearing analysts and so called experts say that gasoline, medications, cigarettes, booze and gambling were all 'recession proof.' I have since learned that people have cut back on expenditures on all of the above, and some in a very serious way.
They are but they aren't depression-proof or, "I ain't got no freaking money-proof." The only reason we aren't in a depression is because of the aggressive actions of the Fed but just how long can the Fed keep things propped up? They can lower rates all they want and flood the market with whatever paper they can create but they can't force people to borrow. Until Joe Citizen has cleaned his balance sheet all this liquidity isn't doing to do a damn bit of good.
It could also be that $300 Billion is the amount that foreigners, like the Chinese, have stopped buying.
Fed is running out of time. The other problem we have. Is the deficit we are running requires us to sell treasuries in order to finance the government. If we run a 1.5-2 trillion dollar deficit this year, were in the hell are we going to fund that gap? The 300 billion, is a downpayment, the FED is going to have to eat at least a trillion in T-Bills. this year. Its only March for Christs Sake! And the rate the government is expanding, if the economy flat lines next year, we could easily run a 2.5 trillion deficit.
if i remember correctly from my macro theory in college, isn't it the case that with the fed injecting money into the economy, money supply shifts out, in hopes of bringing the real interest rate r down to spur investment, inflation is a possible outcome of this situation as well?
Quote from NY_HOOD: ok..if they are buying U.S treasuries,how is that causing money to get into the economy? i know,i'm naive'. ---------------------------------------------------------------------------- The feds are exchanging 'new' money for outstanding debt. This increases the money supply in circulation. Of course, we know the government does not have any money so they simply start the printing presses. The ultimate effect of all the simulation will be hyper inflation.