Stock Market Thread

[Ricky]

The central bank is directly responsible for the creation of the credit and housing bubble. They kept rates too low for too long, enabling the cheap credit to prop up consumption despite falling wages and make mortgages cheaper than they should be. The government also played a role with their regulations, but it was cheap credit that fuelled housing demand and speculation.

Wait. First off, interest rates were never as low as they are now (Dec 2008-present).

But... are you SERIOUSLY blaming the foreclosures on the Fed's borrowing rate and not to speculation in the private sector (including CDO's)?

The Fed doesn't even lend the money to the people; the banks do.

Ignoring the fact that rates have been way lower since then, I don't see how you can blame this on The Fed.

Grading a sub prime mortgage backed CDO as a AAA prime mortgage investment is fraud.

Being wrong isn't the same as committing fraud. Yeah, they were sub-prime mortgages but the investments were seen as safe largely because of the rising values of their collateral, because of the rapid increases in house prices. Looking into it, rating agencies actually LOWERED ratings from Q3 2007 to Q2 2008. I don't think that is a signal they were blatantly defrauding the People. Since S&P has a lawsuit against them now, I guess that's the best way we will tell.

That said, I'm not denying it is possible -- there was certainly motive there.

Our governments are essentially insolvent. The main thing funding UK/US government deficit spending is debt monetisation, our own central banks simply creating the money and "lending" it to our governments. Markets aside, if central banks stopped creating money tomorrow, our governments would be unable to fund their obligations. They would be unable to repay their debts, and would default.

Our deficit as percent to GDP has been way higher in the past.

Maybe I don't understand what you are saying... Do you mean if The Fed were to stop QE there would be a solvency crisis?

Or are you saying the fact that we can control our currency unlike some other countries (such as Spain) prevents this from happening.

I would agree with the latter, but if you're saying a lack of QE would cause a solvency crisis (at least in the US) I don't think I could buy it.

Admittedly, I don't know much about the UK specifically when it comes to this stuff.

 

[ADF]

Wait. First off, interest rates were never as low as they are now (Dec 2008-present).

But... are you SERIOUSLY blaming the foreclosures on the Fed's borrowing rate and not to speculation in the private sector (including CDO's)?

The Fed doesn't even lend the money to the people; the banks do.

Ignoring the fact that rates have been way lower since then, I don't see how you can blame this on The Fed.

I didn't say they were as low as they are now, I said they were kept too low for too long. The first part of the noughties, interest rates were at their lowest levels since leaving the gold standard. They rose them over time later, but by then it was too late. Even then, interest rates in the US have been falling since the 80s, gradually over time favouring debtors over savers. Depleting capital reserves and favouring leveraged speculation.

This cheap money in turn trickled down to the mortgage and credit markets through the banking system. Pumping up credit and mortgage demand, pumping up the housing market. Low rates encourage risk taking because the cost of failure is lower, so they gave out mortgages to anyone with a pulse, under the assumption that housing prices went up forever; so even if they foreclosed they'd get a appreciating asset they could sell off anyway.

Inevitably the high rate of foreclosure caused the bubble to burst. But all of this is rooted in the Fed's cheap rates, and the even cheaper rates of today are pumping up other dangerous bubbles such as in the bonds market. Derivatives are also a large risk factor, because they are highly leveraged and low rates encourage their use.

Being wrong isn't the same as committing fraud. Yeah, they were sub-prime mortgages but the investments were seen as safe largely because of the rising values of their collateral, because of the rapid increases in house prices. Looking into it, rating agencies actually LOWERED ratings from Q3 2007 to Q2 2008. I don't think that is a signal they were blatantly defrauding the People. Since S&P has a lawsuit against them now, I guess that's the best way we will tell.

That said, I'm not denying it is possible -- there was certainly motive there.

It's sort of like the miss-selling scandal. They accidental themselves billions in profits by accidentally sneaking PPI into people loans they didn't ask for... Hence why they call it "miss-selling", as if it was just a mistake that just happened to make them rich...

There is being wrong, and then there is being wrong at such a scale that they had to have known what they were doing. A child on the street could of rated mortgages better than these people, if they saw who the mortgages were given to. No proof of income, no money down, no requirements at all.

Our deficit as percent to GDP has been way higher in the past.

Maybe I don't understand what you are saying... Do you mean if The Fed were to stop QE there would be a solvency crisis?

Or are you saying the fact that we can control our currency unlike some other countries (such as Spain) prevents this from happening.

I would agree with the latter, but if you're saying a lack of QE would cause a solvency crisis (at least in the US) I don't think I could buy it.

Admittedly, I don't know much about the UK specifically when it comes to this stuff.

What is there not to buy? The US government is unable to fund its deficit spending from the open market, so the Fed is creating money in order to fund government spending. Lending them it at historically low rates they couldn't get on the market to keep the governments costs down. If that were to stop, the US government would be forced to look for lenders on the open market to fill the gap, which we already know they cannot find at needed interest rates; otherwise they wouldn't have started monetizing their debts to such an extent in the first place.

This would burst the bond bubble, as the primary buyer of US debt (exceeding China) is America's own central bank. So suddenly a lot of demand for US debt would simply disappear from the markets, requiring much higher rates to justify lending to them.

 

[Ricky]

I still don't think it is fair to say the Fed indirectly caused foreclosures because cheap credit "trickled down" to the banks, then to the people...

The crappy ratings had more to do with it.

Then again, I have no idea where interest rates should be in the first place and I'm not sure anyone does.

The rest of what you said is interesting though, especially the idea of a "bond bubble."

I double-checked the Debt vs. GDP statistic and realized we aren't far off from what we were in the 1940's (I didn't know we topped 100%).

I'm gonna have to read into this a bit more.

 

[ADF]

I still don't think it is fair to say the Fed indirectly caused foreclosures because cheap credit "trickled down" to the banks, then to the people...

The crappy ratings had more to do with it.

Ratings were the graded risk on investment products, in this case CDOs. The rating of CDOs would have had no affect on the foreclosure rate of housing, but the foreclosure rate caused CDO's to go bad.

I think I should post a basic breakdown video of the crisis, just to get the details across.

http://www.youtube.com/watch?v=bx_LWm6_6tA

 

[Ricky]

No, you're right. I'm mixing cause and effect.

I need sleep. lol

 

[ADF]

Anyone considering UK debt or holding the Pound Sterling should dump it now and run as far away screaming as humanly possible.

http://www.youtube.com/watch?v=BzUxxffxugE

This is insanity. Pure and simple.

I've talked about negative EFFECTIVE interest rates due to central bank rates being below inflation, but now the Bank of England has incredibly humoured the idea of negative ACTUAL interest rates. Which is essentially saying we're going to pay you interest to go into debt (if you can access the base rate), and we will fund that interest by taxing everyone who has a positive figure in their bank accounts. Let's punish people for being savers and reward people for going into debt, that's what they're saying. Because there isn't enough debt in the world, you know?

We are a total and utter basket case economy for them to even consider this... That said, it's hardly worse than America humouring minting a trillion dollar coin to pay their debts. We're basically run by financial illiterates who are going to destroy their currencies, they're actively trying to trash their own currencies. Just the other day Mervyn King lectured the rest of the world to not go into a currency war, and then he shoots at them with this.

 

[Ricky]

Yeah, yeah -- the world is going to end :roll:

Our entire economy is based on debt. I wouldn't worry about lowering interest rates causing more debt.

More debt is good for the economy.

Also, as far as solvency we can always raise taxes =P

I'm not sure about a bond bubble, but I guess that would suck for people who own bonds.

 

[ADF]

Yeah, yeah -- the world is going to end :roll:

Our entire economy is based on debt. I wouldn't worry about lowering interest rates causing more debt.

More debt is good for the economy.

Also, as far as solvency we can always raise taxes =P

I'm not sure about a bond bubble, but I guess that would suck for people who own bonds.

Look, since leaving the gold standard; there are only two things giving currency its value. Fiat decree (because the government says so) and confidence (how much faith people have it can be exchanged for something of value). Negative interest rates are a direct attack on the latter, as it is official central bank policy to trash their own currency. It's guaranteed to lose value going into the future, hence the pound being dumped this Monday.

Just one example of how this would impact people is bank account interest rates. It's entirely imaginable that instead of the bank paying you interest to keep your money with them, you'd be paying the bank interest for the privilege of loaning them your money... Now, right now interest rates on bank accounts are shit, because of the 0.5% base rate here in the UK. If that went into the negative, money would better off under someone's mattress than sat in their bank account.

What do you think are the chances of a run on the banking system under that scenario? Where your money is better off out than in? Maybe average Joe on the street living pay check to pay check wouldn't care about getting screwed that little bit more by the system, but I imagine people with considerable savings or wealth would have a different view.

Capital, Capitalism. You cannot have capitalism without capital, and these policies are destroying capital. We are not going to get out of this economic crisis going on a credit splurge, countries are already saturated with debt as it is.

 

[Ricky]

Look, since leaving the gold standard; there are only two things giving currency its value. Fiat decree (because the government says so) and confidence (how much faith people have it can be exchanged for something of value). Negative interest rates are a direct attack on the latter, as it is official central bank policy to trash their own currency. It's guaranteed to lose value going into the future, hence the pound being dumped this Monday.

There's a third -- the country's GDP. As long as real products are being exported, the currency has value. I would say the currency is *always* guaranteed to lose value; that's just a part of this type of economy. You can count on inflation and the entire point of doing this is to get to a certain inflationary rate. This isn't permanent and once inflation kicks in they will change things around again. (assuming it doesn't spiral out of control)

Just one example of how this would impact people is bank account interest rates. It's entirely imaginable that instead of the bank paying you interest to keep your money with them, you'd be paying the bank interest for the privilege of loaning them your money... Now, right now interest rates on bank accounts are shit, because of the 0.5% base rate here in the UK. If that went into the negative, money would better off under someone's mattress than sat in their bank account.

What do you think are the chances of a run on the banking system under that scenario? Where your money is better off out than in? Maybe average Joe on the street living pay check to pay check wouldn't care about getting screwed that little bit more by the system, but I imagine people with considerable savings or wealth would have a different view.

People who are knowledgeable about things would have a different view. That gives them an advantage. I already don't trust the dollar that much with what they are doing -- I think it is *possible* inflation hasn't kicked in yet and when it does it will present itself in a not-so-linear fashion. Still, we have enough real product exported and enough other currencies are tied to the dollar even if it loses a good amount of value people will still be fine. The people who stashed their money in dollars will just be that less well-off because that money isn't worth as much anymore.

That's only one possibility -- I don't think it will necessarily happen but it's something I have taken into account.

Capital, Capitalism. You cannot have capitalism without capital, and these policies are destroying capital. We are not going to get out of this economic crisis going on a credit splurge, countries are already saturated with debt as it is.

Credit gives people the capital to invest. That's kind of the point =P

 

[ADF]

There's a third -- the country's GDP. As long as real products are being exported, the currency has value. I would say the currency is *always* guaranteed to lose value; that's just a part of this type of economy. You can count on inflation and the entire point of doing this is to get to a certain inflationary rate. This isn't permanent and once inflation kicks in they will change things around again. (assuming it doesn't spiral out of control)

There is a world of difference between the typical inflation experienced of a ever expanding currency supply, and intentionally damaging it. They're intentionally trying to damage their currency in order to devalue their obligations, while also improving their international competitiveness to export more. But other countries are trying to do the same thing... Negative interest rates being thrown around is just the latest weapon in the currency wars arms race, as quantitative easing and ZIRP has already been used excessively. Accelerating the devaluation process. There is nothing normal about all this, and they won't just up rates when inflation hits hard; because inflation is the whole point of their activities. They want inflation, they want to inflate away their obligations and the declining living standards of the public are just the collateral damage.

Inflating your obligations away is just a politically acceptable form of default, getting rid of your debts without the embarrassment of officially defaulting.

People who are knowledgeable about things would have a different view. That gives them an advantage. I already don't trust the dollar that much with what they are doing -- I think it is *possible* inflation hasn't kicked in yet and when it does it will present itself in a not-so-linear fashion. Still, we have enough real product exported and enough other currencies are tied to the dollar even if it loses a good amount of value people will still be fine. The people who stashed their money in dollars will just be that less well-off because that money isn't worth as much anymore.

That's only one possibility -- I don't think it will necessarily happen but it's something I have taken into account.

America's biggest export is dollar inflation. If everyone trading with dollars internationally keeps getting a raw deal (which is worsened by QE/ZIRP), people will stop using the dollar for international trade. As is the case of the BRICK countries, who have formed an alliance to serve the groups interests; such as trading between each other without using dollars. If America loses its reserve currency status, it will suffer severe inflation as all those dollars come home. The dollars reserve status as been propping up its downfalls for decades, it would struggle to survive without it.

Credit gives people the capital to invest. That's kind of the point =P

Negative interest rates will just further fuel what is already extremely pumped up unproductive areas of the economy. The people as a whole will not see any of this money, neither the consumer or the businessman. The primary beneficiary will be the banking sector and the state, as they are the only ones who can access the central banks base interest rate. It will not help the economy, only supercharge the growth of state spending and speculation by investment bankers hunting for their next bonus. Everyone else will just be that bit more worse off than they already were, as they are effectively taxed for just having money and living standards decline accelerates...

 

[Ricky]

There is a world of difference between the typical inflation experienced of a ever expanding currency supply, and intentionally damaging it.

The difference between typical inflation and what we are experiencing now is that we have a lower than normal rate of inflation, even with the Fed's actions. So all this talk about damaging our currency is merely speculation.

They're intentionally trying to damage their currency in order to devalue their obligations

No, that's just paranoia. They really ARE doing it to try and help the economy.

and they won't just up rates when inflation hits hard

Again, paranoia. OF COURSE they will. They aren't stupid and they aren't trying to turn our currency to shit. That is a conspiracy theory and one I don't buy. The Fed isn't evil, Bernanke isn't Satan and they are actually trying to help the economy (albeit by the seat of their pants).

The rest of your post is entire speculative as well. You make good points and are obviously informed but you have way too much of a "OH, SHIT THE WORLD IS GOING TO END" view for me to actually agree with anything you say. Since it's all just speculative I guess I'll just leave it to "we'll see." I'm not saying *you are wrong* about anything but you operate under the assumption that the absolute worst is going to happen. Generally it's somewhere in the middle. We *might* see some drastic inflation but it will probably be more along the lines of the late 70's *at most* and everyone will be fine, especially the people who have already thought about all this and accounted for it.

 

[ADF]

The difference between typical inflation and what we are experiencing now is that we have a lower than normal rate of inflation, even with the Fed's actions. So all this talk about damaging our currency is merely speculation.

You're trusting the Fed to own up to something that is politically toxic in the public realm. I do not trust inflation figures put out by the state, when it's in the interests of the state to downplay them. So long as they can keep claiming inflation is low, they can get away with continuing ZIRP/QE policy. Of course the boots on the ground person is still seeing year on year commodity prices rises.

No, that's just paranoia. They really ARE doing it to try and help the economy.

By destroying the ability of the consumer to support the economy by devaluing their disposable income, while also starving businesses of capital because there is no incentive for banks to issue loans?

Again, the only two groups benefiting from the low central bank rates are banks and the government, because they're the only ones who can access the base rate and are recipients of QE. The banks are using the money to gamble on wall street, while the government is just using it to fund their spending obligations. Neither of which help the economy to grow.

Again, paranoia. OF COURSE they will. They aren't stupid and they aren't trying to turn our currency to shit. That is a conspiracy theory and one I don't buy. The Fed isn't evil, Bernanke isn't Satan and they are actually trying to help the economy (albeit by the seat of their pants).

Don't misrepresent my arguments please, I explained why they are doing this, I didn't broadly paint it all as "they're evil". Governments are attacking their own currencies because they believe devaluation is the only way out of this mess, because we're certainly not going to grow our way out of them.

The rest of your post is entire speculative as well. You make good points and are obviously informed but you have way too much of a "OH, SHIT THE WORLD IS GOING TO END" view for me to actually agree with anything you say. Since it's all just speculative I guess I'll just leave it to "we'll see." I'm not saying *you are wrong* about anything but you operate under the assumption that the absolute worst is going to happen. Generally it's somewhere in the middle. We *might* see some drastic inflation but it will probably be more along the lines of the late 70's *at most* and everyone will be fine, especially the people who have already thought about all this and accounted for it.

It isn't speculation, I've explained why. You say they can put rates up whenever they want, but the moment they do the governments balance sheet is going to implode. The fact of the matter is many governments grew and deficit spent themselves to an extent that the current economy can no longer sustain, and cutting the state is politically toxic. Any government campaigning on cutting social services and safety nets would not get voted in, so instead they allow and encourage the decline of living standards and make the cuts that way. Failing to increase a budget by inflation is exactly the same as a cut, inflation is a useful tool the political class uses to make stealth cuts and one that is being fully utilised at this time.

In stock market terms, anything even remotely related to the government or currencies directly or indirectly are toxic. But you cannot just stick your money into any commodity either, as some are more suited for this decline than others. Industrial metals will adjust for inflation, but also the decline in industrial activity and hence their demand.

 

[Ricky]

You're trusting the Fed to own up to something that is politically toxic in the public realm. I do not trust inflation figures put out by the state, when it's in the interests of the state to downplay them. So long as they can keep claiming inflation is low, they can get away with continuing ZIRP/QE policy. Of course the boots on the ground person is still seeing year on year commodity prices rises.

You don't seem to trust *anything* about "the state" except they are out to screw everyone. That's just not the case. Also, there are standard ways to figure out inflation; generally people use prices of common commodities like grocery supplies. There is no huge conspiracy here -- if inflation were a lot higher and the "Evil Gubment" were covering it all up, some non-government agency or academic association would see that rather quickly.

It isn't speculation, I've explained why. You say they can put rates up whenever they want, but the moment they do the governments balance sheet is going to implode. The fact of the matter is many governments grew and deficit spent themselves to an extent that the current economy can no longer sustain, and cutting the state is politically toxic. Any government campaigning on cutting social services and safety nets would not get voted in, so instead they allow and encourage the decline of living standards and make the cuts that way. Failing to increase a budget by inflation is exactly the same as a cut, inflation is a useful tool the political class uses to make stealth cuts and one that is being fully utilised at this time.

No, you haven't explained anything. You have made a bunch of assertions that aren't backed by numbers, or frankly anything, and argued under the assumption everything you say is true. You said without QE we would be in a solvency crisis but you haven't addressed the point I made that we can raise taxes, or implement austerity (like cut half the defense budget already). You say you don't trust the inflation numbers but you don't give any valid reason, just "I said so." You used the word "toxic" twice in your last post, as if it substantiates your argument :roll:

 

[ADF]

You don't seem to trust *anything* about "the state" except they are out to screw everyone. That's just not the case. Also, there are standard ways to figure out inflation; generally people use prices of common commodities like grocery supplies. There is no huge conspiracy here -- if inflation were a lot higher and the "Evil Gubment" were covering it all up, some non-government agency or academic association would see that rather quickly.

Is self interest evil? Then we're all evil. We all to one extent or another hold our own interests above those of others, the government and the political class are no different, as many people will be familiar with. Nick Clegg in the UK signed a pledge to his student voters that he wouldn't increase student fees, and then they were tripled while he was in coalition in government. He later apologised for signing a pledge he knew he couldn't keep, which was mocked thoroughly. People lie to serve their own interests and this is demonstrated by the government frequently, to the point that politicians are regarded as slimy untrustworthy creatures.

The US government amongst others have changed how they measure inflation multiple times, and it's always to make the figures lower. Why then am I being unreasonable to not trust figures reporting low inflation, when there is a recipe for high inflation from the central bank?

And there are none government groups measuring inflation and coming to different results.

No, you haven't explained anything. You have made a bunch of assertions that aren't backed by numbers, or frankly anything, and argued under the assumption everything you say is true. You said without QE we would be in a solvency crisis but you haven't addressed the point I made that we can raise taxes, or implement austerity (like cut half the defense budget already). You say you don't trust the inflation numbers but you don't give any valid reason, just "I said so." You used the word "toxic" twice in your last post, as if it substantiates your argument :roll:

When has the US government demonstrated a willingness to slash their spending to the extent you have suggested? The US government has tried to pass off reductions in the amount they're deficit spending is going up as being cuts, but it's not a real cut if spending is still going up, I can overestimate as well... You're arguing they can just stick up rates or just stick up taxes, which sounds simple and easy on paper but trying to get that to happen in the real world is a different matter. Don't you wonder why America goes into crisis mode every time they reach the debt ceiling? By your logic they could simply cut spending and it won't be a problem. In the real world they don't see the debt as the problem, they talk about removing the debt ceiling instead.

There is no will in the US government to slash to the extent that they need to, it's going to take a crisis to force them into it.

Just look at the tantrum coming out of the US over some cuts due in March.

http://www.youtube.com/watch?v=6ZrdOw-FjeI
http://www.youtube.com/watch?v=arG62EJFlpg

They don't have the discipline to make real cuts, and the US isn't alone in that regard.

 

[Ricky]

And there are none government groups measuring inflation and coming to different results.

Wow, that guy sounds like you :roll:

I'm not going to explain why his "basket of 20 items" (which included rent and gasoline) isn't representative of the consumer price index. It should be blatantly fucking obvious why he got a different number.

Not to mention, the guy is a crackpot...

 

[ADF]

Wow, that guy sounds like you :roll:

I'm not going to explain why his "basket of 20 items" (which included rent and gasoline) isn't representative of the consumer price index. It should be blatantly fucking obvious why he got a different number.

Not to mention, the guy is a crackpot...

Peter Schiff is an asshole, but not a crackpot. You've been criticising what I've been saying, but now disregard that on the grounds of you calling him a crackpot?

Do explain how petrol prices and rent are not representative of the cost of living? Where is this mythical person who can function in modern society without a home or a car/public transport?

 

[Ricky]

Do explain how petrol prices and rent are not representative of the cost of living?

I didn't say it's "not representative of the cost of living."

I said it's not representative of the entire index, especially when you throw two variables like that into the mix that depend on market performance, location and a bunch of other shit. He also didn't give numbers, and frankly I don't care. 20 items of ANYTHING isn't representative of an index. The CPI includes stuff like that by the way. It just averages things out a lot better because it works with actual data analysis.

He's a crackpot because of his dumb fucking experiment that is a joke to anyone with statistical knowledge.

 

[ADF]

I didn't say it's "not representative of the cost of living."

I said it's not representative of the entire index, especially when you throw two variables like that into the mix that depend on market performance, location and a bunch of other shit. He also didn't give numbers, and frankly I don't care. 20 items of ANYTHING isn't representative of an index. The CPI includes stuff like that by the way. It just averages things out a lot better because it works with actual data analysis.

He's a crackpot because of his dumb fucking experiment that is a joke to anyone with statistical knowledge.

If you're going to accuse me of speculation and my claims unfounded, you don't get to stamp "a bunch of shit" on something and walk away like you've disproved it...

Housing and fuel are essential components of the cost of living regardless of where the market is at; and were just part of the basket of goods and services he used, and he explained how he referenced the figures in the video. Effing and blinding about it is totally necessary, it just makes you look insecure and over offended over the videos contents. So please keep it to a minimum.

You don't like the video? Fine, you don't have to believe it. Don't ask me to present information you clearly don't want to see. You're very critical of how he measured dollar inflation, but seem perfectly happy to accept the governments measurement, even though they of all entities would benefit from keeping those figures low as possible.

It's approaching 1am my end, so I'm calling it a night in here. I'll respond to any additional posts if necessary tomorrow.

 

[Ricky]

You know, you're right. Fuck these statistics

The Consumer Price Index should be done this guy's way instead, with 20 items in a basket :lol:

 

[ADF]

You know, you're right. Fuck these statistics

The Consumer Price Index should be done this guy's way instead, with 20 items in a basket :lol:

Whatever makes you feel happier. You trust the government is going to own up to something that will be against their own interests, I don't.

Zero interest rate policy and quantitative easing/debt monetization is a recipe for inflation. When they say pumping out 10s of billions of new money every month isn't creating inflation when there aren't base interest rates to suck it back in, something is up.

 

[Ricky]

Zero interest rate policy and quantitative easing/debt monetization is a recipe for inflation. When they say pumping out 10s of billions of new money every month isn't creating inflation when there aren't base interest rates to suck it back in, something is up.

Isn't most of the money still sitting in banks? I don't think inflation has really kicked in yet. I've also noticed inflation tends to be non-linear in many cases (think: hyperinflation) and if it hits the double-digits it could do so rather quickly. A lot of it has to do with the common mentality, I believe.

I didn't say "I don't believe there is the potential for that" -- I don't believe it's a conspiracy and the government is hiding everything, and I don't even think if we had inflation it would be that bad. It could be a lot worse if you're not in America.

So whatever... Yeah, the Fed don't know what they are doing. Bernanke has even admitted that before. The point is to try and bolster the economy when we are really in a natural credit bust and it is normal and they should probably just let it be.

 

[ADF]

Isn't most of the money still sitting in banks? I don't think inflation has really kicked in yet. I've also noticed inflation tends to be non-linear in many cases (think: hyperinflation) and if it hits the double-digits it could do so rather quickly. A lot of it has to do with the common mentality, I believe.

I didn't say "I don't believe there is the potential for that" -- I don't believe it's a conspiracy and the government is hiding everything, and I don't even think if we had inflation it would be that bad. It could be a lot worse if you're not in America.

So whatever... Yeah, the Fed don't know what they are doing. Bernanke has even admitted that before. The point is to try and bolster the economy when we are really in a natural credit bust and it is normal and they should probably just let it be.

QE money given to banks will only enter general circulation if the banks loan it out, as opposed to playing it on the markets where it will pump up stock prices rather than the cost of living. Unless they pump it into commodity ETFs of course... Government debt monetization on the other hand does enter circulation, because it's money going into contracted companies and civil servants pockets which they then spend into general circulation.