FIAT Currencies & Liquidity Trap, Consequences of Backfire
The Story is fairly simple, to avoid depression and bring the real estate prices to the level of 2007 it was required to increase the money supply because demand cant be created, to estimate the amount of currency/cash required there is no scale or historical economic data available with Mr Bernarke & Co so they conveniently decided to set the limit to infinity and started pouring in the money. Oversupply of money was supposed to be trapped in commodities, oil, precious metals and would eventually be eliminated in form of corruption.
The net result (As assumed or dreamt by FED):
1. House prices would attain levels of 2005/06 by 2017
2. Additional cash created would have vanished in form of correction/loss of wealth
3. By then plastic money would be the only form of cash so no issues with liquidity handling.
1. This would shake the foundations of capitalism and hence democracy.
2. Create Chaos in society
The two are necessary and sufficient conditions for making physical precious metals take the hyper-inflation root, even 10% asset allocation to these by a common investor would help him to see through the troubled time lying ahead of us.