Retail sales look better than "I would have thought. I'm starting to ratchet up my own thinking," Fuss agreed.
Maybe I shouldn't have been so surprised, but none of the three voiced undue alarm about the size of the federal budget deficit-for now. Patel explained that if QE2 goes as telegraphed, the Fed would buy about $600 billion in Treasury bonds next year. That, coupled with expected foreign purchases of another $600 billion, would essentially sop up an expected deficit of $1.1-$1.2 trillion. And that's without any buying activity from domestic institutions and individuals.
Still, one can't help but wonder about the consequences of Fed policy in the 2000-2001 recession, when Fed chairman Alan Greenspan kept interest rates at ridiculously low levels until 2004 and, in effect, poured gasoline on the incipient housing bubble. Recessions happen for a reason but the net effect of Greenpan's experiment was to defer the first recession of the new millennium into the second Great Recession-two for the price of one.
And that wasn't fun for anyone.