Posted on 06/21/2013 11:09:02 AM PDT by whitedog57
There was a truly awful movie in 1990 called “I Come In Peace” where a giant space alien comes to earth to inject a drug into humans and then withdraw a powerful fluid from the brain. For sale on his home planet.
Sound familiar? Yes, Bernanke and The Fed attempted to inject a drug into the economy (monetary easing) and then withdrew a powerful drug … asset bubbles and market distortions.
While some argue that these aren’t asset bubbles, how do you explain the reaction of Bernanke’s hints at the end of monetary easing crushing the stock market.
The housing market has been rising rapidly since March 2012,
Even though mortgage purchase applications are stagnant at 1995 levels. Cash buyers and investors are driving housing prices up.
To be sure, The Fed’s massive intervention created market distortions. But the market is seemingly ignoring The Fed and wants rates to rise. And they have been since May 2nd.
Will rising rates slow down the housing recovery? To be sure, rates are still near all time lows, but the affordability of housing declines with each rise in house prices AND mortgage rates.
To be sure, markets find a way and cannot be restricted by The Fed or the government. Only distorted.
So, we can only hope that The Fed goes in peace. And stops distorting markets.
Share this:
The alien in that movie was not a giant.
Maybe not by NFL lineman standards....
Alien: “I come in peace”
Dolf: “And you go in pieces!”
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.