QE Until Further Notice

Yesterday, Ben Bernanke announced the Fed's latest monetary plan to stimulate job growth, housing demand, and overall economic growth.  What's the plan?  Oh, more of the same failed monetary policies since 2008.  But, this time he assures us that it will definitely work.  He is simply asking us to trust him, since he has a Ph.D in Economics and is omnibenevolence.

Going forth into perpetuity, the Fed will commence with following actions:

1. Purchase $40 billion in mortgage-backed securities per month, which are nothing more than toxic assets.
2. Purchase $45 billion in long-term Treasury securities. (As a side-bar issue, the Fed has bought 77% of all newly issued Treasury debt over the past year.  That is, it simply purchased those securities by creating the dollars [reserves] out of thin air.)
3. Continuation of its zero interest rate policy (ZIRP) on short term debt through 2015.  

So, with this newly, revised QE going forward, the Fed's balance sheet will increase from $2.8 trillion to $4 trillion by the end of 2013.  That is, the Fed will pump an additional $1.2 trillion dollars of liquidity into the financial system.  Why?  Well, I firmly believe that the Fed is operating in a panic mode and simply has decided to "double-down" on its previous failed QE monetary policies of trying to revive the economy.  In other words, these QEs are bound to work eventually.  Right? 

When financial asset prices are no longer driven by fundamentals, such as positive cash flows, but by QEs, you should know that we are in "deep doo-doo."  That is why it is alright to use that four letter word, "Exit," as in getting out of all financial markets right now!