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You're correct, the US economy has a reliable boom/bust cycle that is caused in large part by monetary policy and started in earnest under Greenspan's tenure at
by cloakandswagger 10y ago
You're correct, the US economy has a reliable boom/bust cycle that is caused in large part by monetary policy and started in earnest under Greenspan's tenure at the Fed.
That we're in the midst of one of the largest and most artificial of those 'boom' periods is undeniable, owing to the Fed's injection of $4.5 trillion into equity markets.
Icahn is banking on Newton's third law of motion applying to financial markets as well.
- adventured 10y agoThe Fed didn't inject $4.5 trillion into equity markets. That would be equivalent to claiming they own 24% of the S&P 500. They bought treasuries and junk mortgages to bail out home owners, the US Government and the big banks. Their tampering with equity markets so far has been limited and indirect via the banks.
- cloakandswagger 10y agoTheir monetary policy is responsible for inflating asset prices, so yes they did effectively inject that money into equity markets. No one thinks they went out and bought stock on the open market with it.
- pmorici 10y agoInitially they weren't buying stock but it is pretty clear many central banks have been buying stocks in the last several years. It's a subject of some speculation if the Fed has joined the ranks of central banks who buy stocks directly. http://business.time.com/2013/04/26/why-are-central-banks-suddenly-buying-stocks/ http://business.time.com/2013/04/26/why-are-central-banks-su...