the $50 billion would add to a $168-billion economic stimulus enacted earlier this year, mostly in the form of tax rebate checks already issued.To the deflationists: Isn't stimulus checks sent back to the tax-payers and these kind of stimulus plans anything but money falling from the sky as Helicopter Ben Bernanke promised he would do to prevent deflation?
The second stimulus program would also supplement other steps expected from the federal government in days ahead to boost the flagging economy and calm financial markets.
The Fed is also likely to lower interest rates very soon (this week or the following).
My guess is that the next bubble to pop is the US governments bonds. With a negative yield of -2 to -4%, who is dumb enough to "invest" in these securities? So I think we will going to see a major sell off sometime in the future (bubbles popping are almost impossible to predict and require an external and unexpected event to occur). But when it does, the US government yields will raise by many percent, which will also make it almost impossible for them to raise any money by selling bonds to the savers.
Once this happen, the most likely thing is that the government will still keep spending and spending, but they will have no other choice but to turn to the Fed. What does it mean? That the Fed will then print the money required to pay for this bonds and the inflationary feedback loop will be created.