My Dear Friends,
I have been under the weather with the flu for over a week. That actually gave me more time to work on various matters. One is my consideration of whether I should outline the potentials for 2013 in one essay or give you the various specific circumstances/alternatives/decisions that will be the foundation of the market from 2013 to 2017.
I have decided one great tome is a waste of your time because the various concepts given all at once might lead to confusion rather than a clear conclusion. Therefore today I will present to you the fulcrum concept that everything balances on for the economy of 2013 to 2017.
In a technical sense, the Fed can finance 100% of whatever is required via QE under every possible circumstance. The result of meeting every seller of US treasuries with non-economic buying (QE) on a continuous basis would be an ever lower dollar. Any opinion the t Fed cannot do QE to infinity if they determine the need to maintain modest interest rates is simply and utterly wrong.
So what this entire equation for 2013 to 2017 stands on is a simple decision by the Fed: Will they? It is a political question, not an economic question. If it was a purely an economic decision QE would never have been utilized in 2008.