Quantitative Easing (QE) 2.0 Will Happen

According to the NY Times, since the summer, Fed officials have grown increasingly worried that the United States could slip into deflation, a decrease in prices of the kind that has bedeviled Japan since the late 1990s. The Federal Reserve has been talking about printing more money (QE) to battle "deflation". The claim of deflation is a bunch of propaganda. The stock market, food and energy, and commodities markets are all showing the inflation of QE round one.

QE 2.0 will happen, the question is when and at what cost? Maybe the Federal Reserve is waiting for a stock market crash, to start printing money. Maybe they are waiting for some strength in the US dollar, before devaluing it some more. Maybe they are waiting for a certain yield in the long and/or short term treasuries before they act. Maybe they are waiting for all asset classes to drop sharply, like what happened in 2008. Maybe they have a set date regardless of market conditions, who knows?

There are many possibilities, but one thing is for certain. There will be a QE 2.0, and as a result there will be additional inflation, and there will be lower interest rates.