I’m sorry if this sounds too cynical. I’m actually a very happy person. Fed Pres Bullard in the Q&A of today’s speech said their quantitative easing program has been “very successful,” that they will remove it in a “reasonable time frame” and the Fed could use the quantitative easing tool again in the future. He also said deflation is not a risk right now as higher inflation is more likely than deflation (I’m quoting Bloomberg) Translation: money printing works to temporarily fix and paper over a financial crisis as we got a huge rise in asset prices, we don’t want to give it up so soon and if things turn south again, we’ll knock down more trees and ramp up the printing press again. Also, printing money will eventually lead to inflation and the more disinflation/deflation we see in the short term, the more we will print.
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