The Fed is worried about a Stock Market Bubble - REOIV.com
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The Fed is worried about a Stock Market Bubble

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The signs of a financial bubble are ridiculously quick rises in price when there is no apparent reason pushing that rise.

The stock market has jumped from 7000 to almost 11000 in two years, meanwhile the economy still has 10% unemployment, zero percent interest and many many state and local governments on the verge of bankruptcy.

The crux of the issue is that to encourage people to spend the Fed lowered interest rates to basically nothing. The discount window was lowered to basically zero percent interest so that banks could easily make loans to each other. The problem is if the interest rate to borrow money from a source of unlimited money is almost zero percent savings interest rates themselves drop to barely above that rate. So people have no place to put their money to. Instead they dump their money into the stock market again....

Meaning that if the Fed decides to raise interest rates to curb against inflation from all the free money they made, they run the risk of people yanking their money out of the stock market (which they rightly have no confidence in) and putting it into savings. Thereby shocking the economy back into a downward spiral where the Fed has to again lower the interest rate to keep spending up.

Ladies and gents we are at a precipice waiting for one large economic disaster to come along and shove us into the abyss and the Fed will be able to to absolutely nothing about it.

Buy food, guns and ammo.
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sent in by: reoiv


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