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That's assuming a free market with true price discovery. In reality, we have the Fed buying up financial assets and printing enormous amounts of money, and bail
by listenallyall 5y ago
That's assuming a free market with true price discovery. In reality, we have the Fed buying up financial assets and printing enormous amounts of money, and bailing out companies (which reduces risk, keeping rates low)... the entire thing is specifically engineered to AVOID true price discovery.
- imtringued 5y agoThere is no such thing as a global free market with true price discovery in the real world. Foreign markets exist and you can't control them. They also tend to do insane things like selling products to you for money while lending the money back which drives the velocity of money down while simultaneously fueling speculative bubbles. Whatever the Fed is doing is just a side effect of things that happen in the global economy. It has more to go with globalization and China than the US economy.