It's not just deleveraging the global financial system which is dialling down growth prospects for the next decade, the greying of the global population is another huge secular headwind. See this excellent article: Think Again: Global Aging. A gray tsunami is sweeping the planet — and not just in the places you expect.
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It’s another tough spot for the Fed to be in.
Exacerbate the new bubbles that will again be problems down the road, and trash the dollar further, or allow the economy to adjust itself with another recession that deflates the prices of assets down to levels that would be self-sustaining.
It’s a no-brainer. Blow another bubble and worry about the consequences down the road.
But yet in his speech Friday morning Fed Chairman Bernanke did not go all in on quantitative easing, stopping short of announcing a new policy, saying only that the Fed contemplates doing more, but “will take into account the potential costs and risks.”
So uncertainty remains for a market that has probably already factored in a substantial new round of stimulus.