Despite criticism, the Fed has been prudent in trying to pump up the money supply to prevent the economy from weakening further. For technical reasons, the money supply has not increased as much as they had hoped but still enough to help the economy anyway.
A consequence of pumping up the money supply faster than economic growth is inflation. Fortunately, we have seen very little of that inside the U.S. But, the rest of the world, especially the emerging nations, has not been as fortunate. This is for two reasons: First, many emerging nations link their currency to the dollar and have therefore been importing our monetary policy of "easy money." Second, those nations are more dependent on commodity prices, which has really risen strongly over the last six months.
For years, the stock markets in emerging markets have out-performed the U.S. So far this year, we are out-performing them by 4%. This is a surprising reversal but not sustainable. When commodity prices moderate, they will resume their higher growth, while the U.S. is still working on its huge debt burden, which hampers our growth. They don't have that burden!
