An even bigger bubble now brewing

It's not hard to imagine how conditions today might look a few years hence. With the interest rate pedal nailed to the floorboard, money continuing to spew from Washington to buy all sorts of things, banks once again trying to figure out how to divide up bonus money, and the price of gold again approaching $1,000, officials are concerned about moving too fast toward restoring a more normal monetary policy environment as reported by Bloomberg.

Geithner: Too Early to Implement Exit Strategies
U.S. Treasury Secretary Timothy Geithner said the Group of 20 nations has been “very successful” in helping to end the global recession and cautioned that it’s too early to remove policies aimed at boosting growth.

“You’re seeing the first signs of positive growth now in this country and countries around the world,” Geithner told reporters in Washington today. “We’ve come a very long way but I think we have to be realistic, we’ve got a long way to go still.”
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Geithner said talks in London will include the start of a discussion on bank capital standards as well as a “framework” for how the world’s largest industrial and developing economies can cooperate to remove policies to stimulate growth. While it’s “too early” to implement exit strategies, it’s not too soon to talk about them, he said.
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It is “very important” to the U.S. to “reinforce the progress we are seeing,” Geithner said.

Assuming we navigate the deflationary abyss that continues to beckon from afar, we'll probably find out a couple years from now that we were very well "reinforced" at this point in time, well on the way to inflating an even more enormous bubble ... somewhere, in something ... to replace the one that just burst.