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mk · 4347 days ago · link · · parent · post: Is higher inflation the most painless way to escape current economic troubles?
I suppose that I am assuming that QE and the longterm pinning of interest rates near zero will eventually lead to excess liquidity. Not only is the Fed printing money in the form of T-notes with little to no interest owed, but many many home owners are refinancing at ridiculously low rates. It won't take much of a recovery to convert those mortgages into losing propositions on the balance sheet for banks. I assume that their move at that point will be to shove as much money they can into their investment wing, but acting as herd, the more they do it, the more difficult it will be to make up for the loss on those mortgages. I could very well be wrong here. But that's more-or-less my line of thinking.