The Fed can’t hold back the stock market collapse forever
Read this from Atrios, then join be below for a chat:
I got nothin’
I suppose I really don’t. It’s a horrible situation and even the supposed “good guys” at the federal level, who don’t run things entirely but who aren’t entirely powerless, have shown no signs of having any sense of the catastrophe that is unfolding. “No one” panics unless stonks are tanking, and the Fed is making sure that doesn’t happen.As long as “the market” is happy, rich people are happy, “everybody” is happy.
Ok, up to a point.
The Fed has a couple of tools in its toolbox. It can slash interest rates down to zero thereby allowing companies to borrow money for free (and use that money for (a) building factories and employing people…or (b) dividends!! Huzzah!). The Fed could also print money. Thereby forcing Jeff Bezos to build a bigger money warehouse.
Anyway, the Fed’s hocus-pocus can only keep the DJIA happy for so long because eventually the listed companies will have to sell something of value to actual customers who are both (a) not dead, and (b) not broke. Both “a” and “b” need to be in place for any actual value to be built in the markets. Everything else is just accounting.
It is just a matter of time until we get to see Larry Kudlow have an on screen, spastic, frothing at the mouth, breakdown.
Dow Jones Jumps 400 Points, As Jobless Surge Continues
Wall Street reflexively welcomes unemployment because labor costs go down.
Two factors will kill the Fed games relatively quickly. We’ve seen Japan play the zero interest game for a decade (Their famed “Lost Decade” of the 90’s and beyond) with little to show for it in the real world, and running the money presses will resurrect the specter of inflation quickly, we’ve already burned thru trillions we don’t have. Will be interesting to see what happens, but I’m fairly sure happy days are not coming in the short term and we will be lucky to avoid a true depression. Brother can you spare a bitcoin? Well how about some toilet paper then?
this will all be fine when we raise taxes on the rich
Heavens to betsy!! The rich might move to Luxembourg!