The Fed is Playing a Very Dangerous Game

  The US Fed is committed to keeping interest rates low for the simple fact that if interest rates were to rise then the payments on the debt would send the US into an EU-syle debt crisis along with the commensurate intense austerity measures being implemented.   Unfortunately for the Fed, the bond markets may indeed force this in spite of the Fed’s efforts.   Weimar Germany, like most historic episodes of hyperinflation, occurred when Germany’s Central Bank began monetizing its debts. This worked until the country lost credibility in the international bond markets at which point the Central Bank was forced to monetize everything resulting in a currency collapse and one of the worst episodes of hyperinflation in history.   The US has been moving increasingly down this path which each new QE program. The two reasons the US has not yet entered an inflationar...