The question of the day is whether the Fed will actually end QE or whether the Fed will continue its QE machinations into next year. Europe is sinking into recession and China is in a slump. The US is considered to be the only nation sporting a healthy economy. Therefore, the US dollar is widely held to be the only safe and healthy currency.
Furthermore, it’s the US Federal Reserve that has been chosen to save the world from the horrors of deflation. But will the Fed take on this mission? Will the Fed continue to battle against deflation by creating oceans of new liquidity? That’s the question of the hour, month and the year.
If the Fed continues to buy bonds in wholesale quantities, this increase in liquidity should soon take the Dow above its 200-day moving average and propel gold over 1300. The Fed is terrified of the specter of deflation ... Log in or subscribe to continue reading.