Stocks keep going up no matter what. Every day practically we hit new highs. The Fed keeps dumping money into the financial system. The Bank of Japan is printing on a massive scale too. Housing prices and rents are up significantly in New York and in Washington DC, the 2 cities closest to the printing of new money.
Bernanke wants this to happen. He is desperate for “inflation.” One of the problems with inflation (more accurately a rise in prices) is that it’s like fire. It is unpredictable and can spread quickly into a parts of the economy no one expects.
The Fed has told the world that we will have ultra-cheap money through the middle of the decade. Where is this money going to go? Right now it’s stocks.