The Federal Reserve seems committed to their current low interest rate policy. In their recent press conference a graph showed the members of the board of Governors as well as regional directors predictions on where interest rates would be for the next few years. Almost all of the members predicted low rates for 2012 and 2013 with the numbers dropping off after that(i am inclined to believe these predictions since they are the ones who get to control the rates). When questioned by a reporter as to whether a new round of quantitative easing would be used to maintain these rates Ben Bernanke left the option on the table.
Now we can all argue till we are blue in the face as to whether this is a good idea or not, but judging by the board's opinions more cash will be coming the economies way soon. I just think they should go about it differently than they have been.
The Fed began paying interest on excess reserves in late 2006. This means that any money over the legally required ratio to deposits gets paid interest(the required also get interest but at a lower rate). They are doing this to better control inflation, which without this interest could go out of control. However, they are sacrificing a slower inflation over a long period in order to keep rapid inflation at bay. Despite this the money is still there and at some point people will have to deal with it. This is where there is an opportunity.
Quantitative easing is normally accomplished by buying financial assets (bonds etc.) in order to expand the money supply. Instead of delaying inflation the Fed should lower the interest on excess reserves. This would allow a monetary expansion while helping lessen the inevitable inflation.
p.s. I'll admit that this might be difficult to be accurate with so it would probably have to be done incrementally.
Fed announcement http://www.federalreserve.gov/newsevents/press/monetary/20081006a.htm
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