As a side note, the Fed has also, given the size of its bid (which will likely be increased), enabled the Chinese to sell their Treasury holdings if they want. Then the question is, what will the Chinese buy with those "liberated" dollars? My guess: the hard assets that China needs.

To sum up: Quantitative easing, unfortunately, is an outcome that I always knew would occur, though it still shocked me when Fed Chairman Ben Bernanke finally pulled the trigger. The masthead of my Web site reads, "In a social democracy with a fiat currency, all roads lead to inflation." Many people have been confused because they thought that it meant every negative outcome would lead to inflation directly, but that isn't the case. It's the response to the problems that leads to the inflation (and currency debasement).

We are attempting to print our way to prosperity (see "The Fed embraces inflation," my June 2, 2008, column). That can't be done, any more than we could speculate our way to prosperity during the stock bubble or borrow our way to prosperity in the real-estate/credit bubble. Got gold?