Well finally the Fed is stopping it's asset purchase programme LINK1 they have been interfering and distorting global financial markets by printing $3.7 trillion dollars in the last 6 years. God knows what crappy assets they have purchased (in yellow) and dodgy mortgage backed securities (MBS) they have overpaid for ! Of course, the effect has been to artificially distort bond prices and push US stocks to record highs. Now we have the tricky time to see if the economies and markets can cope without the Fed's "easy money". 3.7 trillion dollars is $11,762 for every single US citizen including the kids ! ($3,700,000,000,000/317,000,000 population) or $19,554 every second based on a 6 year period. I worry about the future problems that the Federal Reserve has created as the government and corporations have used the low interest rate period to borrow like nobody's business. Some companies (Zombies!) that are basically a load of crap have been able to borrow at ridiculously low yields due to the hunt for yield. Share buy backs have been rife in the United States as firms borrow money to buy back their own shares to push up the earnings per share. In good times this works, but in bad times debt still has to be paid putting company profits at risk. Time will tell but I have a suspicion all this is going to end badly. The Wall Street Journal has a nice page showing the central bank balance sheets as a percentage of GDP and the effects of low interest rates on inflation and unemployment LINK2
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