The Feb. 3^rd issue of a newsletter I read projects there will be “More Fed Easing” very shortly.  This easing should take the form of a $1tillion buy up of mortgage-backed securities.  “The goal of the purchases will be to drive down interest rates even further from current record-low levels, and, less obviously, to spur confidence that more monetary tools remain to stimulate the economy.” (Moving Markets)

There are two important points here, if this happens: 1) Very likely we will see a stock market increase with Standard & Poor’s 500 increasing by another 11% to 1450 [Andrew Wilkinson, chief economic strategist at Miller Tabak].  The S&P 500 closed at 1324.09 Wednesday. 2) When the Fed creates dollars based on nothing, it lowers the value of the dollar.  Thus the stock is not really worth more, the dollar is just worth less. As the dollar sinks in value and stock prices rise, so will other prices such as groceries and other necessities.

Given the state of the economy (US) and world economy can this increase of stock value persist?  After the last “Fed Easing” in November we have seen stock prices increase, if an when this easing happens we can expect the same.  But dabbling in the market or gambling with money that cannot be replaced is not a good idea.  The ride may be exciting but if there is a correction or crash, and it is sure to come what is the cost?