Once the Fed stops printing....

For years now the Federal Reserve smashed interest rates to the floor by buying bonds with money it effectively prints. Since 2008, the balance sheet reads over 3 trillion in money they've printed that is backed by...nothing. This action has had mixed results depending on what you are looking at and doing with your money. Certainly, entrepreneurs and homeowners got some relief, while savers (like myself) got whacked along with the declining value of the U.S. dollar. Starving for yield, investors have piled into stocks, pushing the Dow Jones Industrial Average to its all-time high, in a climate of little to no inflation. But, yes there is a fly in that ointment also! The Fed is currently eying a slow down in the printing of money as the economy is showing some weak signs of strengthening. However, they really have to walk a fine line, because a misstep now could bring on all sorts of scary results, with inflation being just one in a long series of potential problems.

In every case, however, most experts agree that something will have to give and give fairly soon! Take the credit markets which some analysts insist are acting weird. Some columnists like Steven Pearlstein insist that credit markets have now entered 'bubble territory' and that the credit bubble may 'pop' soon. His article paints a chilling picture of cheap money going into dubious bond holdings with many stock market issues buoyed up 50% over their real worth. (I like to picture the American economy to be just like a house of cards. It sure looks nice right now, but when and if it falls, it falls hard)!

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