Excerpt: Moreover, liquidity can make bad loans look good, while making them bigger! The Fed will be printing more money, a lot more money, and will encourage "risk taking" with your money. They will encourage you to overpay for things by printing up, out of thin air, hundreds of billions of dollars in "Real Money" and Trillions more in credit that can be used to buy real things like stocks, junk bonds, and real estate - as long as it is mortgaged to the hilt. The "Greenspan Put" is back! The Fed will aggressively try to keep all asset bubbles propped up: especially the stock market and housing.
The Fed will try to get inflation and top line revenue going. Inflation is the only way that all the past bad debt can be serviced. To get inflation going and stop the bleeding in manufacturing employment, the Fed and the Treasury will have to "let the dollar go". Dropping the value of the dollar helps firms raise prices in the US, and bring back more corporate earnings from overseas. A falling dollar makes imports more expensive and helps get prices up and rising. Expect the Fed will drop the currency bomb. It's the MOAB of Monetary Policy, and it has to be done.
For George the 2nd to get elected to a second term the trade deficit has to come down. Devaluing the dollar is the ultimate "Greenspan Put". Besides, Joe Six Pack needs a job to pay for his "Sport Brute", and fill it up with gas. Don't save, devalue! It's in the National Interest. Interest rates will be held down. Just when the drunks in the speculative community were starting to sober up, an election is coming. The President needs a couple million jobs. The Fed Chairman is bringing the punch bowl back, laced with the "good stuff" this time like cutting rates, buying stocks, and pegging interest rates on bonds no matter how many they have to buy.
"Another bubble? Whoopee! Sounds a little bullish to me?