The End of QE2

Here is a chart of the adjusted monetary base:

Here is a chart of the monetary base with a longer time frame.  It shows the picture even clearer:

With the ending of QE2, we should expect the monetary base to stabilize.  There will still be mild fluctuations.  As of right now, there has been no announcement for QE3, even though some analysts are calling for it.

Bernanke really is in a box.  What will he do when the economy visibly turns down again?  Why will QE3 accomplish what QE2 didn’t?  What happens if price inflation goes higher while the economy continues to struggle and unemployment stays high?

Ron Paul asked him this question one time.  He essentially asked Bernanke what he would do if we have 10% (price) inflation along with bad economic growth.  Bernanke responded that that scenario would be unlikely.  Of course, Bernanke has been wrong with just about everything else, so why stop being wrong?

The federal government and the Federal Reserve continue to make things worse.  They not only do not do the right things, but they do the opposite.  The policies coming out of DC will continue to make things worse.  The only way we will see a robust recovery is if the government dramatically cuts spending and the Fed stops buying huge amounts of government debt.  The two go hand in hand.  We need private investment and savings, not more government spending and money creation.