Bernanke said, “The banks have accounts with the Fed, much the same way that you have an account in a commercial bank. So, to lend to a bank, we simply use the computer to mark up the size of the account that they have with the Fed. It's much more akin to printing money than it is to borrowing."
"You've been printing money?" Pelley asked.
"Well, effectively," Bernanke said. "And we need to do that, because our economy is very weak and inflation is very low. When the economy begins to recover, that will be the time that we need to unwind those programs, raise interest rates, reduce the money supply, and make sure that we have a recovery that does not involve inflation."
The Fed’s push button printing press in full effect, inflation sensitive stocks are skyrocketing. I’m kind of going through the sectors, trying to figure out where the lower dollar will drive incremental demand. And I guess that’s where I run into trouble. The credit problems are a side effect of a broader problem of overexpansion and oversupply of infrastructure, goods and services – all of these credit products funded a supply infrastructure far in excess of true demand and credit card balances and hyper-inflated mortgages funded a demand infrastructure far in excess of true need. If this stimulus does not drive demand, we will have a debunked currency, inflation and no growth – the nightmare scenario.
Third world expansion is reliant on first world spending. Retail sales will be my tealeaves of choice for the time being.