So to revisit something from a while back, Fed Chairman Ben Bernanke has begun QE4 where he will buy $45B of Federal debt every month until inflation is higher and unemployment is lower.
Isn't he forgetting something?
While his purchases have an indirect effect on unemployment and more direct effect on inflation, they have a direct, dominant effect on government funding.
The Federal government will borrow more than $1T this year, at least half of which will be loaned to them by the Fed through QE4 and other programs. If unemployment were to fall to 6.4% and inflation to rise to, say, 3%, the Fed would be facing a real quandary. The minute they stop buying government debt, the government will have to find a new buyer for $500B of bonds.
Good luck with that.