Loading ...What both the Fed and the market fail to appreciate is that liquidity won’t matter once risk-off sentiment reaches a tipping point. At that point cash will no longer be a hot potato, but instead actively sought. Endless pools of it won’t dilute its attraction.
The remaining question is whether direct manipulation by the PPT will suffice to reverse sentiment to stop the rout. It didn’t in 2008-9; that stopped only because new “mark to fantasy” rules saved banks from declaring bankruptcy, and then only after ruthless price discovery had already occurred. [CITI went from $65 to one dollar]
Powell may be the most criminal Fed head yet, as he previously showed that he knows how dangerous and wrong-headed these policies are. One wonders what kind of threats he received in 12/2018.