Off the Cuff: We’re in Danger of an Unwind of Everything

In this week's Off the Cuff with Mish & Chris podcast, Mish and Chris discuss:

• QE4
  • NOT a sign of a 'recovering' economy
• Asset overpricing
  • The liquidity flood is making nearly every asset class overvalued now
• No exit
  • The Fed has no plan on how eventually to remove this liquidity from the market
• Potential for a monster upward move in gold
  • It's relatively undervalued, and it's the only safe haven left

Well, they did it. The Federal Reserve announced a fourth round of quantitative easing (a.k.a. "money printing") today.

What's notable about QE4? First off, it's unsterilized, meaning that it is not 'balance-sheet neutral' like the expiring Operation Twist was. In simpler terms, this means it's inflationary – it's putting more money into the money supply. More money in the money supply means the value of each individual dollar is worth less than it was.

With QE4, the Fed has promised to inject $85 billion per month – $1 trillion per year, annualized – for the foreseeable future. That is a staggering amount of thin-air new money. It essentially means that we are funding 100% of our national annual deficit with newly-printed dollars.

Whatever sunshine the pundits might be trying to peddle us, this is NOT a healthy 'recovering' economy.