The FED announced today that it would lower its target for the federal funds rate to a range of 0-0.25%. This unprecedented move allegedly was the catalyst for a 359 point gain for the Dow Jones. It was also the catalyst for a 2.7% drop in the U.S. Dollar Index. However, the effective funds rate has been in this range for a while now. More on this in the coming weeks...
This is, of course, short-term noise - so what will the longer-term impacts be? I still don't know. I've been worried about hyperinflation for some time, but have read some things lately which make a decent argument for deflation. If I had to bet today, I'd bet on deflation for luxury goods and investment assets such as homes, cars and stocks. On the other hand, I'd be on inflation for commodities and basic staples.
At some point, I'll dig deeper and provide my final analysis.
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