[Outcast_Searcher]

$this->bbcode_second_pass_quote('bratticus', '
')The interest from a measly 1.79% on a 5 year US Treasury bond is effectively a negative yield.

You would need maybe 3% interest to keep up.

[Rod_Cloutier]

I will bet that so long as the powers that be can supply food and energy to the population at large; that they can extend 'money games' essentially forever.

If, (when), the powers that be can't supply cheap food and energy to the population at large- that's when we get revolution. Until then its business as usual.

Right now they seem to be achieving a balance between massive deflation, VS massive inflation, and they are content to keep us in this state indefintely. Price stability at all costs; we're about to find out what those costs actually are.

[patience]

Lore said: "Here let me fix that, "Modern capitalism fails again and again and again.”

If by that you meant Crony Capitalism, then I agree.

No help coming from China, who is divesting itself of dollar-denominated assets as fast as they can without outright crashing the market. Japan has taken a hit to GDP and infrastructure that is as yet unfathomed, but sure to take them out as a T-bond buyer. From what I have read, the Fed has been buying nearly all of the new T-bond issues since the first of this year. You cut that off and where you gonna find buyers?

The Fed will likely come up with a new name for it, but we will see either a continuation of the same QE, or the US will fold up like a cheap tent.

My bet is that we will see ever more and larger amounts of printing (for lack of a better term), until the dollar goes into the sewer. The only choice is default, in one form or another. Inflation is just another form of default.

[pedalling_faster]

$this->bbcode_second_pass_quote('pstarr', 'I') agree this stock market bubble is a consequence of Fed policy, QE (it's recent climb began in late 2008) but gold and oil (not so silver) have been on their own trajectory long before QE . It is wrong to blame commodities inflation on QE.

[AirlinePilot]

The Eurozone is going to come apart sometime soon and the dollar will be out of the woods so to speak until that debacle brings everyone else down with it. IMHO its still a bit down the road for that, but things are extremely precarious at the moment so any "unexpected/Black Swan" type event could change that. I think the dollar stops its fall momentarily while the EU does its dance..then the real fun will begin. It will gain strength on the false idea its in better shape as a currency..but that will be short lived.

Interesting times to be sure.

[Daniel_Plainview]

$this->bbcode_second_pass_quote('pedalling_faster', 'T')he US had already lost China as a "top buyer" of US bonds by the beginning of March, 2011, and in the first 2 weeks of March, 2011, lost 2 more primary customers to finance US debt.

GAME OVER ![/b]

That the US has to finance its own debt by printing money is becoming glaringly obvious to everyone who doesn't allow themselves to be lulled into complacency by Bernanke's, Geithner's, and Obama's, pseudo-soothing statements about the US economy.

That's the problem with QE3 - the world knows that the US is printing money.

If I was Bernanke, I would think about raising interest rates a nominal amount, to goose the US $ relative to other currencies.

[Daniel_Plainview]

$this->bbcode_second_pass_quote('pedalling_faster', 'T')he US had already lost China as a "top buyer" of US bonds by the beginning of March, 2011, and in the first 2 weeks of March, 2011, lost 2 more primary customers to finance US debt. GAME OVER !

[rangerone314]

Good analysis. Question is, which option will we ultimately get:
(1) increase interest rates (and kill economic growth---a moot point given peak oil)

or

(2) force the US to become a full-time money-printing banana republic (hyperinflation)

[bratticus]

$this->bbcode_second_pass_quote('', '[')b]Bernanke Says ‘Uneven’ Recovery Still Needs Stimulus
By Caroline Salas Gage and Steve Matthews / Bloomberg / June 8, 2011

... Stocks and bonds fell as some investors interpreted the comments as a signal that the Fed is unlikely to deploy a new round of bond purchases to bolster the economy.

“He’s saying monetary policy is on course and right on, and there’s no need to change at this point,” said Sung Won Sohn, an economics professor at California State University- Channel Islands and former chief economist at Wells Fargo & Co. “The implication is not only will there be no change, but a third round of quantitative easing is not likely to come.”