A few weeks back, I cheered the Federal Reserve for following a do-nothing course.

I was quickly mistaken. After months of delaying, the central bank announced a third round of quantitative easing (QE). Now that everyone and their mother has had a chance to pontificate on the ramifications of this policy, let’s take a look at how it’s already affected markets.

At first, it was a currency trader’s dream. The euro shot up to its highest levels of the year, and other currencies rallied as the U.S. dollar fell. But since then, we’ve come back to a status quo. Why? Because the central banks behind these other currencies have begun to follow in the Fed’s footsteps to provide for more easing and liquidity to markets as well.

Editor's Note: 5 Signs Stock Market Will Collapse in 2013

Just as with the first two rounds of QE, the real winners so far have been precious metals and U.S. stocks.

This shouldn’t come as a surprise to anyone — this outcome was widely predicted. But what’s interesting is the rhetoric that Federal Reserve Chairman Ben Bernanke used to justify more easing. Simply put, the Fed is going to print money until employment improves.

Well, you can print money until we have a Zimbabwe-style hyperinflation, but that won’t create jobs. In fact, it might just make things worse. Money created by the Fed might go into the banking system, but it won’t go into the economy at large.

As we’ve seen over the past few years, individuals are cutting back on debt. The overall trend is still in a decline for new consumer loans, business loans and car loans.

Let’s look at it another way. Say you’re a counterfeiter. You print up some bills on a high-end printer in your garage (by hitting ctrl+p) and then start to spend the money around town. You don’t want to spend too much at one place, or people might recognize your forgeries, so you simply go buy a few things here and there.

In and of itself, some individual purchases won’t create enough demand to justify hiring more workers.

Simply put, that’s why the Fed’s plan to print to infinity won’t create new jobs. Monetary policy has its limitations, and good fiscal policy will do the job far more effectively. Unfortunately, we can’t expect anything positive on that front for the time being.

In fact, brace yourself. In less than 100 days, if nothing changes on the fiscal front, America will be hit with the largest tax increase in history, as the Bush-era tax cuts expire and automatic spending cuts kick in. This will likely send the economy into a recession.

Editor's Note: 5 Signs Stock Market Will Collapse in 2013

Right now, all the Fed is doing is stoking inflationary tinders, which could cause the whole economy to go up in smoke. That’s why the smart money is going into stocks and precious metals.

Taking into account the fiscal picture and the monetary picture, precious metals are the best bet to protect your wealth through the start of next year.