Morgan Stanley: QE4 could piggyback on QE3 this year

Didn’t the Fed just launch the third round of quantitative easing, pumping 40 billion new U.S. dollars into the economy each month? And hasn’t Ben Bernanke said that QE3 will run indefinitely, not to be stopped until the unemployment rate reaches some nebulous and unspecified target? And with all these vagaries surrounding QE3, haven’t we only just coined nicknames such as QE Infinity, QE∞ and QEternal?

In short: yes, yes and yes.

Yet despite the surge of new money to enter the U.S. economy each month, for as long as Bernanke sees fit, Adam Parker, Morgan Stanley’s chief equity strategist, has declared that the Fed may quickly find QE3 to be inadequate. Specifically he has asserted, “QE3 will likely be insufficient to significantly boost equity markets and we wouldn’t be at all surprised to see the Fed dramatically augment this program (i.e., QE4) before year-end.”

You read that correctly: Morgan Stanley’s chief equity strategist is predicting QE4 to be added to QE3. In other words, this fourth round of quantitative easing wouldn’t succeed QE3; QE4 would go on top of QE3.

And Mr. Parker isn’t alone in his assessment that QE3 won’t go far enough to get whatever results Bernanke is looking to achieve. Paul Ashworth and Paul Dales of Capital Economics point to a myriad of factors, especially those in Europe, as to why it’s inadequate: “The Fed can commit to deliver whatever economic outcome it likes, but the problem is that the crisis in the euro-zone and/or a stand-off in negotiations to avert the fiscal cliff in the U.S. may well reveal it to be like the proverbial Emperor with no clothes.”

If this all comes to fruition, what does it mean? Take the $40 billion that the Fed has already committed to pushing into the market each month, couple that with the higher inflation that will most likely follow, and then add to that a yet-to-be-determined additional amount of dollars. We don’t know how much that will be yet – and admittedly this is mostly conjecture today – but if the Fed decides to take such a course, the pace of inflation will most likely increase even further.

40 billion new dollars will be entering the economy each month. The Fed has that power.

Contrast that to gold and silver: There was so much gold and silver on earth last month. There will be the same amount of gold and silver next month. And the month after that. Despite the best efforts of alchemists over the course of history, this is an immutable truth.

Ask yourself: Do you want your investments in a currency that can be conjured on a whim? Or do you want them stored away in an asset whose supply is fixed?

To learn how to protect your hard-earned savings from QE3, QE4 and whatever may follow, take a hard look at physical gold and silver. Call Birch Gold today at (800) 355-2116.