well and truly broken

The markets are broken. So says Chris Martenson of Peak Prosperity. Because they are not sending any clear signals anymore. Speculators are now the majority in the market. Not good. Sure has been a swing from the investor type. Mr. Martenson went on to write that nothing can be reasonably prices when the central banker misprices money and buys up everything related to bonds. Nothing can be reasonably priced.

What we have is a printing money out of thin air scenario. This might as well be called QE4. It is to act as both monetary and fiscal stimulus. The main goal is to provide economic activity, especially home building. The goal is to reduce the unemployment rate.

The Fed is now in the business of funding nearly 100% of all new government spending in 2013. As it does so another $1 trillion will be pumped into the economy. Inflation has to come into play with this mix.

Benanke said the Fed policy is tied to the unemployment rate. We could have a very long wait for the stimulus to end. The participation rate comes into play like it never has before. Conflicting numbers to be sure. As more people leave the labor force the participation rate goes down so does the unemployment rate. When more jobs are created the unemployment rate goes down too.

This latest QE effort will be with for 2 to 3 years according to Martenson. The Fed is likely to add another $3-4 trillion to its balance sheet. That's 300 - 400 % more money in the next year than was created in the first 200 years after the Declaration of Independence.

The one item to watch is inflation. Can the Fed keep it up? We'll see.

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