Although Commodity Surge doesn't support the inflationary practices of the Federal Reserve and other central banks (they call it quantitative easing now), Bank of America (NYSE:BAC) is correct in saying it will help support the price of commodities when it is again introduced into the economy.
The financial giant said in a report titled "The Liquidity Supernova," that they see quantitative easing adding 15 percent annually to copper, oil and precious metals.
As far as commodities go, the good news is they don't need the misguided actions of the Federal Reserve to go up in price, as demand from emerging markets guarantees many commodities would move up whether or not interference comes from the Federal Reserve or other central banks around the world.
This is one of the reasons why inflationary actions from the central banks will do no good. Demand is driving the commodities market, and other sectors, no matter how much money they throw at them, aren't going to be affected in any way, as the hundreds of billions in stimulus has already revealed to us. Trillions when you include the entire world.
So while throwing money into the market could offer support for commodity prices, they in fact don't need it, and when you consider the long-term consequences and need to pay back these outrageous sums of money, it isn't worth any short-term benefit from it, even if it does come.
Bank of America sees that even if commodity prices find support from inflationary actions of the Federal Reserve, the broader economy may not benefit at all. I would say it won't benefit at all, and we, our children, and our grandchildren will be stuck with the unethical bill to pay.
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