The End Of Cheap Money?

It has been reported recently that the days of record-low interest rates may be coming to an end, now that the federal reserve is looking at discontinuing its aggressive bond-buying program or at least throttling it back. Faced with the prospect of no more cheap money and potentially unchecked inflation, the markets reacted negatively, as was to be expected.

The disarray was so swift and alarming that the fed stated it would have to re-evaluate its plan. Can the fed slow down and eventually stop its stimulus package, currently pumping billions into the economy every month, without sending financial markets into turmoil? Originally, the official position was to continue the stimulus until unemployment fell below a certain number, but it seems that metric may not be the deciding factor anymore. So while the fed works out exactly what their policy will be, and communicates it in a clear manner, it appears low-interest rates and cheap money will be here for a while longer, some say as late as 2015.

Federal Reserve Chairman Ben Bernanke discusses U.S. economic outlook and policy: