Thursday, November 04, 2010

So, the Fed is going to expand the money supply, as I've been anticipating. The stock market is taking it well, which is a mixed sign; business revenues will go up in pace with inflation, and assuming the economy doesn't tank stocks are a good investment. The rise in stock prices means investors think the economy will hold together despite inflation.

The expansion of the money supply will show up (eventually) as inflation, and not as a devaluation, which IMO is not ideal for the economy. Worse yet, there is no sign of any austerity measures, which means the fundamental issues with government spending aren't being solved. Expect further "easing" by the Fed in a year or less.

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