The “fairy dust” has kept things going for a long time. Will it continue to work? How long? It won’t work forever. Did it just stop working?
Next week will be fun.
China has been very loose with its monetary policy historically but especially since the Crash in 2008. Its economy is also run (fundamentally) by cronycrats who think they can manipulate the economy to prosperity. (Sound familiar?)
And we learn more about the most powerful woman in the world.
The economy is addicted to easy money. Just the slightest hint that the Fed will end, or even just reduce its extraordinary bond purchase program, and rates tick up and buyers run from the market.
The Fed’s latest stock market bubble is at risk of blowing up.
And here comes the taper? (Maybe?)
Sure the Community Reinvestment Act (a totally crony law) had something to do with housing’s abrupt rise and fall in this country. And there were other factors besides Fed policy. But the primary reason why the global housing bubble, and before that the tech bubble, blew up and then collapsed is because of the easy money policies of one Alan Greenspan.
Central banks exacerbate fluctuations in the economy, but we are told the exact opposite.
A case for Janet Yellen is that as the Fed’s current vice chair, she represents continuity. Based on her comments and past record, she would either continue Bernanke’s policy or even take them up a notch, creating even more new money in order to “help” the economy. A case against Janet Yellen is the flip side of this. Bernanke’s policies have been a complete failure, so choosing an acolyte of his would be the worst possible thing to do.