Quote Originally Posted by thriftyandboringinohio View Post
So, Southernguy -I think you are right that the Fed will print money. I think the reason they will print is to try to keep interest rates low. Rising interest rates would be too damaging to tolerate right now. And the Fed approach will work for quite a while, until it doesn't. Simple supply and demand for money, the Fed will make it abundant so it's price (the interest rate) stays low. ZIRP to the moon, baby.

And jk, what you say follows logically from this. The money the Fed prints has more than one consequent effect. It pushes down interest rates, but it also pushes inflation up ( i.e, pushes the value of the dollar down, we're drowning in them). So as nominal prices rise from printing, nominal interest rates can rise while REAL interest rates stay low or zero. The Fed succeeds. Of course gravity still works, and trees don't grow to the sky. That approach can't work forever, but it can work for a long time.

I think you two guys have it spot on.

It's interesting to think about the timing. Let's speculate that the Fed permits the official CPI to go up a half point a year. That gives us 3 years or so before they need to admit inflation is staying above the sacred 2% target. So maybe in late 2022 the Fed will change course and disrupt the system. Does this imply we can safely play in the bull market for stocks for a couple more years? EJ's insights would be very helpful...
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i've been following luke gromen's commentary for a while. he has the same scenario, and expects it to benefit equities as well as gold. he's also a fan of btc, a belief i don't share. he points to the wwii period and thereafter as our closest analogue. huge gov't debt, the fed pinned interest rates including pinning the 10yr at 2.50. inflation rose markedly. equities almost kept up, bonds were killed in terms of real value.