Uncharted Terrority

QE-3 to infinity, creating money out of thin air, was announced on the thirteenth of this month:

The Federal Reserve announced plans to unleash more stimulus Thursday, in its third attempt at a controversial program to rev up the U.S. economy.

The policy, known as quantitative easing and often abbreviated as QE3, entails buying $40 billion in mortgage-backed securities each month. The end date remains up in the air, as the Fed will re-evaluate the strength of the economy in coming months.[...]

Meanwhile, the Fed will continue its existing policy known as Operation Twist. Together the two programs will add $85 billion in long-term bonds to the Fed's balance sheet each month.

  QE-3 is "open-ended". It will continue until the unemployment rate drops to an unspecified number. (It is interesting that one of the driving forces of hyperinflation in the Weimar Republic was the desire to prevent massive unemployment.) The Federal Reserve is now buying around 74 percent of all new debt issued by the Treasury Department.

Ron Paul's stance of QE-3:

To me, it is so astounding that it does not collapse the markets. [Bernanke] said, ‘We are in very big trouble. We are going to do something unprecedented and we believe it will not hurt the dollar.’ [...] It means that we are weakening the dollar. We are trying to liquidate our debt through inflation.[...] I think the country should have panicked over what the Fed is saying that we have lost control and the only thing we have left is massively creating new money out of thin air, which has not worked before, and is not going to work this time.

According the Dallas Fed President:

The Federal Reserve's decision to jolt the economy a third time with monetary stimulus measures won't help the country much but could stoke inflationary pressures down the road, said Dallas Fed President Richard Fisher, a noted inflation hawk.[...]

Such a policy tool — known as quantitative easing but dubbed by many as merely printing money out of thin air — follows two similar rounds in the past that have flooded the economy with trillions of dollars with the hope of encouraging investing and hiring.[...]

It will come as no surprise to those who know me that I did not argue in favor of additional monetary accommodation during our meetings last week. I have repeatedly made it clear, in internal FOMC deliberations and in public speeches, that I believe that with each program we undertake to venture further in that direction, we are sailing deeper into uncharted waters,' Fisher told the Harvard Club recently, according to prepared remarks of his speech.

Despite all the models and resources at the Fed's disposal, uncertainty is a very difficult factor to plug into assumptions when forecasting the economy.

'The truth, however, is that nobody on the committee, nor on our staffs at the Board of Governors and the 12 Banks, really knows what is holding back the economy. Nobody really knows what will work to get the economy back on course,' Fisher said.

'And nobody—in fact, no central bank anywhere on the planet—has the experience of successfully navigating a return home from the place in which we now find ourselves. No central bank—not, at least, the Federal Reserve—has ever been on this cruise before.'

The Federal Reserve adheres to a dual mandate to keep prices stable and unemployment rates optimal.

The Fed sets monetary policy by targeting inflation rates to 2 percent, but many market experts say the latest stimulus policy reflects the Fed's desire to prioritize the unemployment portion of its mandate way above keeping inflation rates in check.

In other words, the Fed is so willing to keep its foot on the gas pedal and risk seeing inflation rates rise above target levels in order to see unemployment rates fall that the country is steaming ahead deeper into unfamiliar waters.

'Not only will they tolerate higher inflation, not only will they wish for higher inflation, but they actually may target higher inflation,' Mohamed El-Erian, CEO of Pimco, manager of the world’s largest bond fund, told CNBC.

Central banks elsewhere have rolled out similar measures, flooding the world with inflation-fueling liquidity.

'This is true for all central banks — the (European Central Bank), the Fed, the Bank of Japan, the Bank of England. We are so deep into unfamiliar territory, so deep into experimental mode, that we don’t know what the consequences will be,' El-Erian said.

'Whoever comes afterward will have to clean up the mess.'

On the point that  "central banks elsewhere have rolled out similar measures, flooding the world with inflation-fueling liquidity.",  Germany's Constitutional Court opened up the flood gates in Europe that will unleash unlimited money printing:

Germany's Constitutional Court gave a green light on Wednesday [September 12th] for the country to ratify Europe's new bailout fund, boosting hopes that the single currency bloc is finally putting in place the tools to resolve its three-year old debt crisis.

But the strings it attached to its endorsement of the ESM and a separate European pact on budget rules were less onerous than many had feared.

European Central Bank (ECB) President Mario Draghi announced plans last week to buy 'unlimited' amounts of government bonds issued by stricken euro states like Spain and Italy in order to reduce their borrowing costs.

That plan fuelled optimism in the markets, but it was contingent on the ESM coming into force. Following Wednesday's ruling, German Finance Minister Wolfgang Schaeuble said he expected the rescue fund to be operational within weeks.

 Also Japan has decided to act by printing more money, something they have been doing for a very long time, in response to QE-3:

The Bank of Japan announced Wednesday that it would expand its asset purchase program by 10 trillion yen in an effort to stimulate its economy as global demand slows.
The announcement comes less than a week after the U.S. Federal Reserve announced its latest stimulus plan, and two weeks after the European Central Bank revealed its new bond-buying program.

Apparently this is not enough, "The Bank of Japan is ready to expand monetary stimulus again even after this month's action and may ponder new steps if necessary, board member Takehiro Sato said, warning of global uncertainties that could push the economy into recession".

Printing money devalues the currency of the nation that engages in such actions, and that in turn gives it an unfair economic advantage against other nations. This forces other nations to intervene and devalue their currency. It is a global race to the bottom.

What does all of this mean? This is very spooky stuff. The global economy is based on debt. Nations have been spending money that does not exist, and paying for this with creating money out of thin air for some time now. It is very much like a con artist that gets a loan and pays for that loan with another loan and so on. The game is rapidly approaching the end. The very next step for the Federal Reserve and just about every other central bank in the world is 100%, straight-up, Weimar Republic, Zimbabwe type money printing. This means that massive world-wide inflation, or some economic disturbance, is possibly not that far off. As the Dallas Fed President said central banks "are sailing deeper in uncharted waters". Now is the time to educate yourself and to prepare to avoid finding yourself in the situation found below. 

As noted in the book When Money Dies:

In hyperinflation, a kilo of potatoes was worth, to some, more than the family silver; a side of pork more than the grand piano. A prostitute in the family was better than an infant corpse; theft was preferable to starvation; warmth was finder than honor, clothing more essential than democracy, food more needed than freedom.