The reason this question is in the stock market forum instead of the economics forum is that the assumptions about QE II may be bogus. More than half a trillion in putback lawsuits against such companies as citigroup and Bank of America are working their way through the court system. Assuming that the Fed has better data than most of us it is possible that 600 billion in QE plus 300 billion in reinvestmented funds may represent expected charges against bank capital in which case no money will leak into the stock market. Money base increases do not translate into more M3 money if the money base increases are simply offsets of shrinking bank capital. If the current money injection is less than or equal to writedowns then it is deflationary. The buy/sell ratio of corporate insiders would support the idea that S&P 500 CEOs and CFOs have concluded that the injection is inadequate. At the moment there is an estimated 9 years of foreclosure supply in the pipeline and at some point two bad things will happen: panic foreclosure dumping will ensue and a wave of strategic defaults will hit. If either or both of these things happen in 2011 QE II and a possible QE III will be absorbed without spillover into the stock market so a crash becomes likely. Does this make sense to anybody else?