The news pundits call the minutes from the Fed’s December policy meeting showing a growing concern about further increases in the central bank’s $2.9 trillion balance sheet since 2007-2009 a “surprise” for Wall Street. Quite frankly, how could anyone take QE3 seriously as being open-ended when it was announced before the elections? Come on! You have to be joking not to have seen through this timing.
Of course the Fed will slow or to stop purchases well before the end of 2013, citing concerns about financial stability and the size of their balance sheet. The elections are over. They did their job. It is time to get real. The Fed is concerned about the bond market – not main street America. The Presidency will change in 2016 and they will be gone so there is no incentive to worry about the economy. It’ the debt!
The Fed is concerned that if interest rates rise because of inflation, the balance sheet will tank. The Fed will shift now to be more concerned about the bond market. The crisis they face is rates are so low, even a quarter point up tick will be devastating for the bond market.
So forget the HYPERINFLATION nonsense. They will raise taxes and try to keep interest rates low for now. This is all about maintaining the status quo – power.