So Much for the Federal Reserve Creating Stability
CNBC’s Fast Money quotes an investment strategist who says that when Federal Reserve Chairman Ben Bernanke gives his first press conference on April 27, his remarks “could induce a 10 to 15 percent correction” in the market. Here, “correction” means “drop.”
The reason the market might drop one-tenth of its value in a matter of hours is due to some analysts’ fear that Bernanke will not continue printing money (i.e. quantitative easing) to inflate the value of assets. When values return to more realistic levels, investors are likely to stop banking on government-distorted policies to bail them out.
The purpose of the Fed is to tinker with the money supply and interest rates to stabilize the economy. So far, the only stability it’s guaranteeing is as fake as a free lunch.
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