What’s the big news? Every headline you read implies the same thing. All eyes are on Ben Bernanke.

“Bernanke expected to announce hundreds of billions in new QE,” says one headline.

“Investors counting on support from the Fed,” says another.

“Fed easing could push stocks higher,” says a third.

The man is supposed to announce a program of quantitative easing. He’s supposed to do it next week. And if he announces too little of it, investors are going to sell risky investments – including stocks and commodities. In the meantime, investors are guessing.

Yesterday, the betting went against a big push into QE. Investors figured that maybe they’d over-estimated Ben Bernanke’s commitment to chicanery. They worried that the announcement next week might fall short of expectations.

The Dow retreated 43 points yesterday. Gold dropped back $16.

What will it do tomorrow? Who knows? The whole investment world has gone a little crazy. It’s all speculation now…speculation on how much new money the Fed will add to the system.

Investors aren’t buying in anticipation of higher earnings or looking forward to a healthier economy. They’re not padding their retirement nests with great stocks at great prices, or participating in the growth and prosperity of 21st century America by buying equities. Instead, they’re gambling that the economy will get worse…and that Bernanke will be forced to go boldly where only fools and morons have gone before….

…that is, on the road to hyperinflation.

Remember. There’s inflation. And there’s hyperinflation. Normal inflation is caused when people have more money to spend and less to spend it on. They bid up prices.

Hyperinflation is different. It comes not from an increase in demand for things…not from greed, that is…but from FEAR…raw, naked, unadulterated fear that paper money is losing its value.

What touches off hyperinflation? Sometimes the cause is obvious. Central banks print up bills with lots of zeros on them. Everyone knows the currency has become “funny money.” Everyone rushes to get rid of it.

Typically, this causes a collapse in the economy…which convinces the central bank to add more zeros!

The US central bank is not adding zeros – not yet. It is just threatening to add more currency. Will this new currency lead to inflation? Probably not much. The money will get into the hands of speculators at the big banks – those that can borrow from the Fed. It won’t get into the hands of small businesses and householders. So, most people will not really feel richer; they will not want to borrow. They will not want to spend. Demand will not increase. Prices won’t go up appreciably.

But while this new money probably will not create inflation, it could well create hyperinflation. We don’t know how it works…not exactly. There are so few examples in history that we have no sure model to show us. But speculators could suddenly lose faith in the US dollar. They could sell it off – in favor of land, stocks, collectibles or gold. Dollar-holders – large, institutional holders – might panic, realizing that their dollars are losing value fast. Householders might follow…desperate to get rid of dollars before the next nightly news report tells them that they have lost another 10% of their value.

All Hell could break loose.

But that is still in the future. Maybe 6 months ahead. Maybe a year ahead.

In the meantime, we are still at the beginning of a Great Correction. We have a long way to go. And we should expect high unemployment, low or negative growth, bankruptcies, bear markets, foreclosures…

The big trend is still biased in favor of generally low consumer and asset prices…maybe even deflating prices. Until Bernanke gets his cash machine running hot…that is…

Then, who knows what will happen?

Bill Bonner is the President of Agora Publishing. For more on Bill Bonner, visit The Daily Reckoning.