More stimulus on the horizon, Federal Reserve officials hint

Federal Reserve Chairman Ben Bernanke's open-ended promise to provide liquidity for the nation's markets and borrowers earlier this year seems as if it will be kept, as media sources report that the U.S. central bank is currently debating whether or not to continue its controversial quantitative easing program.

Decried by some as a guarded form of money-printing, quantitative easing (QE) was performed in response to the 2007-08 financial crisis as way to stem widespread banking losses. Since then, the tool has been utilized to lower interest rates, which U.S. officials have hoped would spur borrowing and thus fuel an economic recovery.

However, with QE now in its third iteration – this time with a promise for continued easing when needed – some economists have begun to question its effectiveness. Yet comments from the William Dudley, the Federal Reserve Bank of New York's current president, imply that the central bankers might press ahead regardless of the warnings.

"I will be assessing the employment and inflation outlook in order to determine whether we should continue Treasury purchases into 2013," Dudley said during a speech on November 29 at New York City's Pace University. "The Fed will promote maximum employment and price stability to the greatest extent our tools permit, and we will stay the course."

Adding more fuel to the speculation fire, Dennis Lockhard, who runs the Atlanta branch of the Federal Reserve, said in a speech in early November that he and his colleagues remain disappointed by current U.S. economic trajectory.

"I am not prepared to say we are remotely close to substantial improvement on the employment front," he told the assembled crowd.

If the Federal Reserve does engage in continued QE, it's tough to predict what the market reaction will be. In the event that significant volatility takes hold in the U.S. financial sector, diversifying portfolios may be a wise choice for American investors. Those interested in alternative forms of wealth preservation should visit and download their own "Free Game Plan Report."