hi doma,
the use of qe is a means to mitigate the issues of deflation. right thing to do.
when the economy recovers, bb will reintroduce tightening measures to limit the problems of excessive inflation.
there's pretty much no relationship between the total value of gold and the total value of the economy. if it is 1% or 10%, it is still an asset whose value can reduce or increase.
people won't dump the dollar unless the fed loses its credibility. the bond yields tell you that this is not an issue.
the trouble with your argument is it relies on you speculating about things which are not a reflection of what is actually happening. the market sees us money as extremely safe. the federal reserve is extremely credible. this is a part of the problem. it would be helpful if folks think they are slightly less safe, and then we might get a shot at a wee bit of inflation.
a little bit of inflation would be useful. it would reduce the value of debts relative to the productive capacity of the economy.
you imagine a situation "when people start dumping the dollar". isn't what is happening here. this is just an imaginary domascene. you should open your eyes to what is actually happening for a second.
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