Much has been made as well as not-made about the eventual drawdown of the current QEIII program. Originally designed as an $85 billion per month purchase plan of U.S. Treasuries and mortgage bonds by the Federal Reserve. Currently the Fed will purchase “just” $25 billion and end the programstocks headed for a construction completely in October. Yet both the credit as well as stock markets have reacted in a manner that has some rather flummoxed.

A year ago when the programs’ ultimate demise was announced, stocks and bonds were hit yet so far this year the Dow hit record levels and closed at 17122.01 today while the S&P 500 broker 2,000 and stayed there. Interest rates have also been market-friendly hovering near record lows. But an article today on points out there are some that think a correction in stocks is coming to the tune of 60 percent. What?

One expert warned that Fed actions over the past two years will ultimately lead to a significant correction and markets will face a “period of extreme turmoil.” Granted, the expert runs a Bear Fund and those types will always appear gloomy. Yet the comments point out what others have said and why many are still surprised at bond run-ups with no inflation. Yet inflation is inevitable if history is any indicator. Printing massive amounts of cash will eventually produce inflation. That’s taught in every macro-econ class in America. Yet once inflation does appear, even perhaps slightly so, the Fed may react too aggressively thinking they’re already behind the inflation curve while not raising rates sooner.

If that’s true, stocks, bonds and mutual funds will take a beating. Real estate investors are still enjoying solid gains in both home values and rising rents and inflation will cause their assets to increase in value, not fall as a result of additional Fed action. Or inaction as many have been pointing out.