Question: What Happens When QE2 Ends?

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“What happens when QE2 ends?”
World renowned gold expert Jim Sinclair said, “States and Municipalities can and will go broke.  The economic impact will act to foil QE.  That will result in QE to Infinity regardless of MOPE. (Management of Perception Economics)  Therefore, Washington and the Fed will backdoor rescues by buying State & Municipal debt, a form of QE.”
Next is prolific writer and author James Howard Kunstler.  He specializes in novels about fictional depictions of the post-oil American future.  Here’s what Kunstler says about the end of QE2, “My guess is the Fed will find some other way to buy distressed securities or “investment-like” things. The models for that are the Maiden Lane portfolios (there’s more than one) which are stuffed with crap like bankrupt hotels. Yes, the Fed owns bankrupt hotels! If they don’t buy up what are essentially loans gone bad, the system sucks itself into a black hole of compressive deflation.  That outcome is likely anyway, because the Fed won’t be able to keep up with loans gone bad.”
Rick Ackerman, professional trader and founder of the website and newsletter called “Ricks Picks,” says, “I don’t think there’s a snowball’s chance in hell that promiscuous easing will end, regardless of what the fraudulent successor to QE2 is called. The commentary running right now at Rick’s Picks says that easing in the form of a U.S. bailout of cities and states could become politically necessary as early as this year, although a decision to do so would trigger the worst run on the dollar in history.  Look for the bailout to happen anyway, but in a way that tries to obscure the fact that it is being done with funny money. The subterfuge won’t work for long, since public workers will figure out quickly that unless their retirement benefits are indexed to inflation, they’re going to get paid in confetti.”
James Rickards is a heavyweight in the world of finance.  He is an expert in Threat Finance & Market Intelligence.  “What happens when QE2 ends?” Rickards says, “The Fed never said that QE2 would end; that’s a popular misconception but they never said it.  What they said was that they would buy $600 billion of intermediate term Treasury securities by June 2011.  They never said that was all they would buy. They never said they would stop. The comments were carefully worded so that $600 billion by June was a targeted minimum but they never said anything about a maximum; technically there is no maximum. The first QE program ended in 2010 and the economy immediately began to fall into a double dip. 

In summary, all the experts I polled think QE Will Not End.  That will surely mean an imploding U.S. dollar and exploding inflation.  This is scheduled to happen by the end of June, making this the most predictable financial calamity in history.
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