"People think the Fed is printing money and spraying it around the world," said Anthony Crescenzi, senior vice president and market strategist at Pimco.

"The level of misunderstanding [about QE2] is something you can't fathom," declared Loomis Sayles vice chairman Dan Fuss.

Both Fuss and Crescenzi were speaking on a fixed-income panel with Wells Fargo Advantage Funds managing director Margaret Patel moderated by yours truly at The Advisor Money Show in Orlando, Fla., on November 19.

What's really happening in Crescenzi's view is that as consumer and corporate deleveraging continue, the money supply is barely expanding, loans are contracting and money is ending up back at the Fed, which is simply trying to recycle the money back into the real economy. None of the other panelists challenged Crescenzi. In fact, both concurred with his explanation.

If the outrage at home and abroad to QE2-outrage I initially shared-is based on misperceptions, Patel, Fuss and Crescenzi didn't view it as a home run for the economy as much as for the equity market. "It's a marginal positive" for the economy, Patel said.

Fuss thought it "could boost equity prices" and called the stock market "statistically cheap." Patel hinted that she thought that [higher stock prices] appeared to be a major goal of the program.

The earnings and cash flow "underpinnings" of corporate America "are very good," Fuss observed. "I've never seen it look this good," he continued, adding a few words of caution. "It's like the Red Sox [in first place] on the Fourth of July. Don't take it to the bank."

Crescenzi noted that his own outlook for the U.S. economy in 2011 is more optimistic than the official view at PIMCO. He thinks final demand in America could surge 4.5% to 5.0% next year while GDP could grow at a sustainable rate of 3% or even slightly higher.

What explains the gap between the growth rates in final demand and GDP? Savings and deleveraging. For much of the last decade, GDP and final demand were propelled by Americans' propensity to use home equity lines of credit as their own personal ATM machines.

Clearly, a wealth effect from rising stock prices, assuming they are sustainable could also spill over into the real economy. Crescenzi estimates a wealth effect of 4%-means each $1 trillion in increased equity market values translates into $40 billion in additional consumer spending-and he speculated it might even show up in retail sales during the holiday season.