This article (CNN) examines the injection effects that are now ocurring in response the Fed’s program of inflation.
There are, after all, only a few things you can really do with money. You can stuff it into the mattress, you can spend it, or you can buy an asset. The low funds rate makes the mattress option less appealing — money markets and savings accounts don’t throw off much of a return these days. Spending takes time to rev up. So the money gets parked in some sort of asset — gold (which is going up), bonds (which are going up), houses (which are going up) or stocks (which are going up).
“When you print money, it’s going to inflate some asset price,” said Northern Trust chief U.S. economist Paul Kasriel. “Maybe we’ll revert to the late 1990s and buy stocks with it.”
