Fed to decrease the money supply to prevent hyper-inflation?

Discussion in 'Economics' started by DrPepper, Oct 24, 2009.

  1. Everything that I have been reading for months suggests that the Fed will continue to print money to monetize our unpayable debt and to devalue the dollar in order to make our future debt payments with less valuable dollars. The effect of the increased money supply has been to increase the value of real assets such as metals, oil and agricultural products, while causing one of the greatest stock market booms in history. Had the Fed not printed so much money, we would have probably had a 1929-style stock market crash, worse unemployment than we currently have and a clear-cut depression.

    However, this article suggests that the Fed is getting ready to decrease the money supply to prevent inflation:


    If that is true, the dollar could rise, the stock market would probably fall and real assests would either fall or stop rising so rapidly. But the issue of what to do with our astronomical, ever-expanding national debt remains.

    I am curious if anyone has read anything else about whether and when the Fed is planning to pull dollars out of circulation to prevent inflation and what effect this might have on the markets.
  2. Not anytime soon:

  3. "Draining liquidity to prevent high inflation" is typical lip service. The surprise will be if they actually do so to any significant degree.
  4. jnorty


    what everyones failing to understand is the fed will be brought to there knees if they keep printing. rates will start skyrocketing very shortly if the fed keeps printing. maybe friday meant something as its been a long long time since i've seen long bond rates sky with the mkt falling 100 or more pts. do people think this perfect world of money printing to the moon,lowest rates in our lifetime and a falling $ will last?theres a whole other world out there buying oil and consuming goods that will put massive pressure on inflation regardless of what the us economy does
  5. We did have a 1929 style stock market crash. Now we have had a 1930 50% rally. What happens next is a breakdown below 1929s stock market crash low. Has the govt succeeded in preventing this crash......so far but the verdict isnt out yet. Look at the charts.