Money printing damage to markets is already done whatever the Fed does next, gold’s time still coming
By: Peter Cooper
Thursday, 21 February 2013
Stocks tumbled by the most in three months yesterday after news that Federal Reserve members are divided over the effectiveness of money printing through QE. The markets reacted as though the inflation of stock prices would stop the moment the Fed turns down the money presses.
Actually that is true. But what is not correct is to assume that inflation will go away as quickly. That is the nasty unintended consequence of QE that is now baked in the cake and waiting to erupt. You cannot add trillions to the balance sheet of the Federal Reserve and increase the money supply this much without causing inflation.
Cash piles and inflation
There is a pesky time delay, however. New money can just sit doing nothing as cash. US companies have their highest cash balances in history. Once this money gets spent the inflation will emerge and then some. Warren Buffett just bought his can of beanz.