They appear heck bent on GROWING their balance sheet....???   And they think this is a good idea...???

WHY as a producer would I want to hold ANYTHING in the US DOLLAR.. IF they are going to keep PRINTING and FLOATING the US DEBT...?!?

Heck you might as well leave grain in the bin and wait until this injection moves wheat to $20.. and Corn to $15.. WHY HOLD $$$ if it is going to DEPRECIATE vs ANYTHING else...?!?

At first I kind of thought John Burns was a kook.. but GOLLY this is surreal.. borderline dumb what the Fed is doing to the purchasing power of the $.

http://opinion.financialpost.com/2012/12/12/terence-corcoran-bernake-steers-feds-monetary-machine-into-uncharted-waters/

"In a stunning and history-making policy departure that challenges some basic tenets of economic theory, Ben Bernanke is taking the U.S. Federal Reserve’s monetary machine where it has never been before. It may even be where no central banker has ever been before.

Using the printing presses and control over interest rates, Mr. Bernanke’s Fed said Wednesday it will hold interest rates at near zero and continue to buy up to $1-trillion a year in bond and mortgage securities at a rate of $85-billion a month until the cows come home."

Anyone who holds a CD or bond or anything like that.. anyone who can't increase their wages as fast as the dollar depreciates is going to get HOSED if they go ahead and do this.. All you have to do is look to Argentina in the 1980's/90's..  The MARKETS will NOT look kindly on this development if they actually go ahead and do this..

In this case, the cows are measured by the U.S. unemployment rate and inflation. Specifically, the Fed’s Federal Open Market Committee (FOMC) said it will remain in super-stimulist mode “at least as long” as the unemployment rate remains above 6.5% and inflation is projected to be below 2.5%.

One of the talking heads says that we already have inflation over 3% so maybe this isn't going to last very long anyway..  Once Commodity producers figure out that they should just hold inventory.. inflation will be off to the races.

We have officially crossed the line of PRINTING our way out as Policy.  In effect the US is implementing the monetary policy of a third world banana republic.

Unbelievable..

http://online.wsj.com/article/SB10001424127887323981504578175693687046384.html?mod=WSJ_article_comments#articleTabs%3Darticle

But the Open Market Committee stated that it will keep interest rates near zero, and by implication keep buying bonds, as long as the jobless rate stays above 6.5% and inflation stays "no more than a half-percentage point above the Committee's 2-percent longer-run goal."

That is a 2.5% inflation target by any other name, and it's striking to see a central bank in the post-Paul Volcker era say overtly that it wants more inflation. This is a victory for the Fed's dovish William Dudley-Janet Yellen faction that echoes economists who think we have to inflate our way out of the debt crisis. Inflation remains quiescent, but central banks that ask for more inflation invariably get it.

These new overt economic targets are part of Mr. Bernanke's campaign for more "transparency" in monetary policy, but they also have the effect of exposing how much the Fed has misjudged the economy. In January 2012, the Board of Governors and regional bank presidents predicted growth this year in the range of 2.2%-2.7%. On Wednesday, they predicted growth of 1.7%-1.8%, which means they are expecting a downbeat fourth quarter.

Which brings up another irony: Mr. Bernanke may be pulling the trigger on more bond purchases now because he fears economic damage from consumer and business concern over the fiscal cliff. Yet no one has done more to promote public and market worry over the fiscal cliff than Mr. Bernanke, notably in his June testimony to Congress.

Meantime, the Fed's near-zero interest rate policy will continue to disguise the real cost of government borrowing. One reason the Obama Administration can keep running trillion-dollar deficits is because it can borrow the money at bargain rates. Stanford economist and Journal contributor John Taylor says the Fed has bought more than 70% of new Treasury debt issuance this year.

All of this will create a fiscal cliff of its own when interest rates start to rise. The Congressional Budget Office says that every 100 basis-point increase in interest rates adds about $100 billion a year to government borrowing costs. Pity the President and Congress who have to refinance $15 trillion in debt at 6%. If Mr. Bernanke really wants to drive the President and Congress to reduce future spending, he shouldn't keep bailing them out with easier money.

The overarching illusion is that ever-easier monetary policy can return the U.S. economy to a durable expansion and broad-based prosperity. The bill for unbridled government spending stimulus is already coming due. Sooner or later the bill for open-ended monetary stimulus will arrive too.

So in effect.. we are giving the Drug addicted Government.. MORE DRUGS in order to help it solve it's addiction.. 

"This will not end well."