The Fed’s quantitative easing reduction will pause, then reverse into further monetary stimulus; it is clear that Yellen, being the dove she is, will be looking to raise inflation. On that note, inflation itself will rise sharply as the velocity of money picks up, probably to levels above the late 70’s/early 80’s in an attempt to keep the treasury bubble sustained and the newly forming bubble in equities. Both of these bubbles will pop, presumably within the next few years, however, it will depend on future actions by the Fed: should they keep up quantitative easing and rates low for a VERY extended period of time, say more than the next 5 years, the charade could possibly be able to stay afloat. If this course is taken, then hyperinflation will ensue, so long as the velocity of money will have picked up by that point. This being said, it is possible that the economic malinvestment in the capital structure, namely treasury and equity markets, will manifest at some point, before or after hyperinflation hits.
Should Yellen actually follow through with the scaling back of QE, then we will see the bubbles in treasuries and the newly forming one in the equities market pop, bringing about a deep depression.
On Canada, the housing bubble will pop very soon, perhaps within the next year; speculation and sentiment are at an all time high which are the final steps in the bubble process. This sentiment, paired with the cutting of interest rates from 4.25 to .25 after America’s housing bubble popped, provide enough evidence that rampant malinvestment has occurred in the sector.
The price of gold, despite the large correction last year, will continue to rise as it has done since January. Both gold and gold stocks are in the infant stage of what will become the greatest bull market of all time. Gold, or perhaps some other basket of commodities, will once again become the global currency in a post-US dollar collapse due to hyperinflation (if the Fed keeps printing), or a very depressed economy and weak dollar (if it cuts back QE), or potentially both in the case of hyperinflation after the treasury and equity bubbles burst.
Boy. It isn’t fun playing Dr. Doom.