I agree the FED changes the equation. But the FED ironically enough creates even greater extremes in optimism and pessimism. The FED is a catalyst for people to act. People still have to act. I agree with many on here that the first domino to go down will be Japan. The Nikkei is now up 72% over the last year. That is approaching 1999 levels in our NASDAQ. First go the JGBs, then the Nikkei then our market will follow.
Agreed that Japan *should be* a nice test run, for our strategy. That is a country worth watching, IMO. If they can QE their way out of the demographic nightmare that exists in Japan, then it will be quite easy for the Fed to navigate such a strategy. If they fail miserably, then it's likely that we will follow at a less damaging pace.
They can QE their way of the massive debt burden by lowering the real value of the debt (JPY depreciation). If USD/JPY depreciates to 200 or 300, or some other big number, then QE might "succeed" in increasing nominal economic growth and inflation, and lowering the real debt burden, at the expense of a much weaker currency and lower living standards for most Japanese people.