(Even) more unintended consequences of quantitative easing...

   It's a fairly well established fact that cheap money printed by the US Fed is chasing higher yields in overseas markets, where raging asset prices and higher yielding currencies make for more attractive investments than US-based assets.  This pursuit of hot markets and stronger currencies is possibly becoming self-reinforcing and starting to exhibit bubble-like dynamics.  For more on the bubble-making tendencies of easy monetary policy as well as its current effect on emerging/overseas markets see Billige Dollars bereiten nächste Finanzkrise vor and Fed's Danger of Leaks with QE2.
   One particularly egregious example of this is Hong Kong.  Here is a chart of EWH, an ETF composed of a basket of Hong Kong stocks that trades on the NYSE:

Notice that the run-up began just as the markets started to believe that QE2 was on its way.   What's wrong with this?  Well, nothing if you are a sophisticated American investor or a rich person living in Hong Kong.  For everybody else, however, this is a disaster.
   The problem is that this sort of asset-only boom only enriches the people at the very top of the economy (i.e. people who already own lots of assets like stocks and real estate).  It does nothing to help the middle and lower classes, since these gains seldom translate into wage and employment gains.  If anything, these asset-only gains hurt middle and lower income earners by making the cost of real estate and food prohibitively high.  For a particularly depresssing example of this, see this video about people living in cages in Hong Kong.
   A less stark version of this dynamic is playing itself out in the U.S. today, where Wall Street executives are set to receive record pay while the official unemployment rate still stands at 10%.  A Barron's reader left a comment recently that aptly summarizes the American dynamic:

"The fed is destroying the American middle class. My grocery bill is up, my heating bill is up, and it costs more to fill my gas tank. Meanwhile, I earn no interest in savings, have a flat paycheck, and have a 401K that is too small to benefit from asset inflation."

   Let's hope that Ben Bernanke, who is a very smart man, is thinking this through.  I don't envy his position, but it might be time to stop the presses and let the economy adjust the old-fashioned way...