Loading ...So let me get this straight: Cheap money, low rates and QE produced the slowest recovery in history. Markets and the economy can’t handle any disturbance without intervention, both are entirely debt dependent and to this day have not been able to either grow organically or stay on their own feet without artificial help.
And note: The size of interventions required is ever increasing. It takes more and more money to keep things afloat. In the meantime every single big rally in the last couple of years, sold to the public on the promise “forward looking” and “optimism” (rate cuts, tax cuts, trade deal, blah, blah, blah) all of them have turned out be wrong.
No 4%-5% GDP growth, no earnings growth in 2019, no earnings growth in 2020. But now the biggest asset bubble inside of a recession ever, a recession from which we will emerge not cleansed and rejuvenated, but zombified, ever more indebted, with an even larger wealth gap than ever before. And if that backdrop doesn’t justify 150% market cap to GDP valuations I don’t know what does.
The Fed has created a full on gambling casino and the gamblers have moved in and are pulling the ‘buy’ triggers non stop.
The Fed is not saving the economy, it’s zombifying it and in process of inserting itself ever deeper into markets the Fed itself is becoming too big to fail. The Fed losing control over the asset bubble is now the biggest risk factor to the economy. A rescue model that relies solely on ever higher stock prices ever more divergent from the underlying economy creating an ever larger wealth gap in the process.
It’s a spiral out of control that is masking what is really going on: The structural economy is circling the drain and zombifying the economy will only clog it up with dire consequences to come, consequences for now as markets are still busy chasing every liquidity headline.