Off-Topic: Pumping up by the Fed

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	Name:	MartiniMan -
	Subject:	Pumping up by the Fed
	Date:	3/7/2013 9:37:02 PM

The Fed continues to pump money into the economy and Wall Street likes it a lot. Means lots of liquidity and low interest rates. However, the chief fear with pumping by the Fed is inflation. If or when that happens (depends on who you talk to) you will see interest rates rise quickly as the Fed tries to control inflation and potentially or probably a collapse in the bond market like we saw in 1994. That will be a huge shock to the economy and likely send stocks sharply downward.

What worries me is the stock market is rising not because of any fundamentals but because of Fed intervention. The history of that kind of intervention has not been good. Anytime a bubble is created by govt intervention the piper has always needed to be paid eventually. I don't have a good feeling about how this is going to end and if I were close to retirement right now I would probably exit equities. The problem though is where to go with the money. Bonds are equally risky. Real estate is still a very long term play. And money markets can't even keep up with inflation. And speaking of which, the last place you want to be in an inflationary period is in cash. Precious metals may be a wise choice for a portion of your portfolio.

Other messages in this thread:

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Business-Savvy Posters Please Explain - MrHodja - 3/7/2013 8:51:58 PM

Pumping up by the Fed - MartiniMan - 3/7/2013 9:37:02 PM

Pumping up by the Fed - water_watcher - 3/7/2013 9:51:15 PM

So true - MartiniMan - 3/8/2013 11:07:28 AM

Pumping up by the Fed - realfast64 - 3/8/2013 11:11:26 AM

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