The Dow has roughly doubled since the easing started 5 years ago.
I am not expert, but I doubt that the underlying value of the companies has doubled. Obviously, flooding the world with dollars keeps interest rates low, causing investors to park their money in stocks. A tapering of the easing will most certainly drive the market down, as well as increase interest rates which in turn will hurt the real estate market. Also related to this, is a doubling of gas and other commodity prices in the past 5 years, also related to a weak dollar.
The fed believes that as long as the interest rate they pay on the $85 billion per month that they are pumping, is less than the annual growth in the GDP, then they can pump forever.
I believe that this is suicidal, but don’t see any of those in control willing to do what needs to be done.
It is a difficult thing to understand the FED and the Gov. except that it’s all to prop up WAll Street and the Government with money that isn’t there...it’s “in the air”...crossing the cyber world as if it’s real....it’s not tangible.
Rather like people who live in cyber world as if it’s real....when in fact it’s all information in one form or another. “In the air”....
Yet the reality is evidenced by the working class every day as they see prices increase and their paychecks decrease for any number of reasons.....which indicates to me whatever they’re are pulling off it’s not working for any but the elites and those they choose to reward.
causing investors to park their money in stocks
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Many people, and especially retirees, are chasing yields and returns that are not suitable for them. This will be a deadly mistake for many investors who should not be exposed to risks they don’t understand. IMO the Fed is enabling such dangerous behavior.