NEW YORK (TheStreet) -- I've been baffled by the chorus of media calls and the apparent market anticipation of QE3 by the Federal Open Market Committee meeting ending Wednesday. I understand the power of wishful thinking, or at least so I think. But this one is beyond me.

The U.S. economy has been remarkably consistent over the last two years, namely being stuck in limbo land. Every good number is instantaneously met with an equal and opposite bad number.

In other words, we're fast becoming Japan as I had predicted two years ago on


, though possibly with a slightly higher stagnation baseline due to various sociopolitical differences. And for those who think the Fed will or should come to the rescue so long as the economy is not busting at the seams, the hope is not supported by the history of Fed actions.

As I

wrote on SeekingAlpha in June

, history clearly shows the five-year market-expected inflation, in the form of difference between five-year Constant Maturity Treasury rate and five-year Treasury Inflation-Protected Securities rate, is a critical barometer the Fed watches closely.

If the inflation expectation drops below 1.5%, the Fed gets nervous and starts seriously debating about full-scale QE, with the action significantly delayed after hitting 1.5% at both times.

If it drops near 1.5%, the Fed may do some version of QE Lite, such as Twist. As of July 30, inflation expectation stands at 1.78%, pretty close to the sweet spot of 2% as far as Fed is concerned. The following chart summarizes these points:

On top of this, oil (represented by the

United States Oil Fund

(USO) - Get Report

) is still at elevated levels and agricultural commodities (represented by PowerShares

Agricultural commodities ETF

(DBA) - Get Report

) are very high and expected to remain high for the foreseeable future.

It will take some time for high corn prices to propagate throughout the food supply, but propagate they will since corn is the most important feedstock for virtually all diary and meat products. The commodity inflation is not as dire as in late 2010 to early 2011, in the aftermath of QE2.

But right now we only have Twist2. I think it's clear at least some FOMC members have learned the lesson from post-QE2 commodity inflation scare (2.5% inflation expectation is the trigger for Fed easing, or at least close to it). Fed needs a very good reason to do a full-scale QE. At this point it has none.

Unless filtered with a heavy bias of wishful thinking, Bernanke's recent testimony at Congress clearly shows a balanced view on Fed action. And the notion of Fed easing in advance of eurozone crisis crosses into the territory of delusion.

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Fed is not in the business of crisis prediction; there is just too much political risk for them to do anything until at least the danger is clear and present for all to see. It's Politics 101, really: if you prevent a crisis from happening, who's gonna thank you for it?

Speaking of the eurozone crisis, the ECB has every reason to ease at its meeting Thursday. The economy is falling apart everywhere there, including the mighty Germany. And the Austrian-German philosophical opposition to easing is somewhat of a mirage at this point, I suspect.

The haggling is more about influence, mostly between France and Germany, in the future banking supervisory entity or whatever entity they may fancy. And they surely realize they have to save the economy before having a chance to save the euro.

There is a bit of game theory play, however. Since FOMC is to finish first, if Fed does ease, then it'd take some pressure off ECB to ease. Conversely, if Fed doesn't, the pressure on ECB would be higher. Fed's decision today has direct implications on ECB Thursday.

Since risk assets had a significant run last week, lack of significant action by the Fed today would likely bring them down -- stocks (a represented by the

S&P 500 Index

(SPY) - Get Report

), gold

(GLD) - Get Report

, maybe even oil (USO).

The U.S. dollar

(UUP) - Get Report

and Treasuries

(TLT) - Get Report

would rebound.

Thursday will be dominated by the ECB decision, meaning euro

(FXE) - Get Report

weakness, and the nuances in FOMC language. Since talk is cheap, I expect them to recognize the continued softness in U.S. employment and the risk of contagion from softening worldwide economy.

Some symbolic gesture, such as extending the projection of low interest policy is likely. But this language parsing game is way over my head; I can only try to ignore and look beyond it.

At the time of publication, the author was long UUP and U.S. Treasury bonds.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.