4 ms·
I think the root cause is one layer of abstraction away from the stock market: the federal reserve. It's federal reserve policy, primarily interest rates, that
by Consultant32452 4y ago
I think the root cause is one layer of abstraction away from the stock market: the federal reserve. It's federal reserve policy, primarily interest rates, that drive these boom and bust cycles. The stock market/companies are just riding the wave.
- hdjjhhvvhga 4y agoSure, the last few years are an extreme example. But I don't believe it's just the Fed, there are other factors at play.
- Consultant32452 4y agoI've only been old/educated enough to follow it since around 2000, and there's been a direct correlation between fed policy and the markets. After 9/11 they dropped rates which created the housing bubble, then when they tried to raise interest rates the housing bubble popped in 2008, so they lowered rates again. We've been at near 0 percent interest for years, creating the current bubble/inflation. They are now putting downward pressure on the money supply which is causing the banks to crash, housing is not far behind, etc. This isn't to suggest there's no other factors, but monetary policy is a major driving force in the boom/bust cycle.