Where Does It End?

Talk about ballooning! This is a chart created by David Rosenberg at Merrill Lynch.

• "Given the announced increase in the TAF program, unlimited swap lines and modest growth in other segments of the asset side of the Fed’s balance sheet we could see it hit $3 trillion over year end. This would represent an 84% increase on top of the growth in assets we have already seen in 2008."

He has been very good at calling the "big picture" correctly and I would actually say he may be proven conservative in his estimate. Thinking about the massive risk that both the Fed and the US Government are assuming is extremely disconcerting. I understand the need to unfreeze the credit markets and the implications the world faced if no action was taken (I am a 100% free-market capitalist so it is extremely difficult for me to say that, fyi) but in the longer term, after we pass through this mess, we are heading for probably an even larger crisis. The actions taken here and abroad is very inflationary in the long run. This is not good for the dollar or any fiat currency that has turned up the speed on the printing press. No wonder we have seen massive physical buying in precious metals over the past few weeks -- http://mintnewsblog.blogspot.com/2008/10/examining-unprecedented-demand-for-gold.html .