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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Perspective who wrote (211685)	7/22/2009 12:05:53 PM
From: RockyBalboa	Respond to of 306849

Scary indeed. I simplified a bit and thought it is self-stabilising, best case, like: -if things reflate and the fed gradually phases out stimulus then the assets can be sold in a liquid market with ease -if things go dark (again) the fed does not need to remove stimulus for a prolonged time, rather buy more as you said. But it is not so: there is no guarantee that fed assets recover or a market for those exist when other hot inflationary spots (aka bubbles) develop; inflation is unpredictable and can distort values by far, otherwise it would be easy to hedge inflation. So the fed can still be stuck with a depreciating balance sheet (think bonds of all kinds) amidst rampant inflation.