I was trying to get my head around the rate of inflation and the printing by the Fed and how the money supply is almost rotational as it tops up what has been lost.
this I hope will give me an indication when more visible inflation hits and when gold will be free form the strong dollar.
It seems there was a lot of money taken out of the system when the collapse happened during the GFC. This money, taken form company values, stock markets and the house prices necessitated the fed to do its first injection of QE to put money back in.
but its didn’t do enough to re-circulate the money, so the problems persisted, they pumped more, which appeared to give more liquidity, ( but with much more debt) Yet, they still needed to do more, just to reproduce the lost value of wealth. and i am meaning wealth, not money, that’s something separate, that’s liquid and its being done to flush in now in an effort to recreate the level of perceived wealth.
I'm not sure what the total cost of the GFC wipe-out was, ( if anyone has any estimates please let me know) because if we can get a good understanding of the amount, then we can possibly estimate how much needs or was needed to be put back into the economy to get back to where they were.
so far, it appears the market has absorbed more than it lost in this bubble-rush to equities. Houses are inflating again, so the gap must be close, or possibly even passed.
Once the resulting growth in their perceived wealth is passed that point, then the inflation will become the real issue.
The yanks probably realise they have created something very scary, the re-growth of wealth has come at the massive price of increasing public debt to unsustainable levels and this money has now flowed into hot areas with no real returns for investors. They also know what will happen when the only thing pushing their market up is taken away with an end to QE, which must happen at some point And now to make matters worse, they have huge amounts of capital flowing in form other countries, which will push things too far if they cant control it so i reckon that's the reason they are holding the US dollar up in value, it’s the fed’s only defence against losing control of things altogether, because if the value drops and people look to exit the US$, the amount of money already in the system and the Japanese money and others will bring a massive inflation to the money supply, but perversely not the wealth.
what a conundrum, and now they have upped the limit on the card the situation will fester longer. when is it going to fold in on itself?? look for the drop in the US $ value, a fall in the DOW and Nikkei and i think that's the turning point
