The dangers of endless quantitative easing Aug 02,2021 - Last updated at Aug 02,2021 CHICAGO — Inflation readings in the United States have shot up in recent months. Labour markets are extremely tight. In one recent survey, 46 per cent of small-business owners said they could not find workers to fill open jobs, and a net 39 per cent reported having increased their employees’ compensation. Yet, at the time of this writing, the yield on ten-year Treasury bonds is 1.24 per cent, well below the ten-year breakeven inflation rate of 2.4 per cent. At the same time, stock markets are flirting with all-time highs. Something in all this does not add up. Perhaps the bond markets believe the US Federal Reserve (Fed) when it suggests that current inflationary pressures are transitory and that the Fed can hold policy interest rates down for an extended period. If so, growth — bolstered by pent-up savings and the additional government spending currently being negotiated in Congress — should be reasonable, and inflation should remain around the Fed’s target. The breakeven inflation rate also seems to be pointing to this scenario.