Greenspan calling for QE IV?

[lchoro]

Two year old article. His comments are in the context of a stock market that corrected 10-15 percent. It's since rallied 60-plus percent in two years. There were 30-odd central bank rate reductions to staunch a minor market decline of 10-15 percent. Europe and Japan went negative. Half the two-year notes in the developed world still have negative yields. Both the ECB and BOJ also expanded purchases of government and corporate debt, as did others. Some also purchased stocks outright.

Low interest rates and yield will eventually cave asset prices since they can't support equity extraction from financial assets, especially in a financial system geared at 10-to-1 or higher. Either the central bank supports asset prices to offset the equity extraction or the adjustment is allowed to happen very quickly a la 1987 that minimally affects the economy.

[ChiGeekGuest]

Originally Posted by Freak80

Correct.

We can’t have the rich suffering from the natural consequences of their actions. That’d be downright un-American.

Originally Posted by FirebirdCamaro1220

It's the same reason the LLC was created, to shield rich people from the consequences of bad decisions

Agreed, & these are the underlying or at root cause for passage of the Commodity Futures Modernization Act of 2000. Let's face it, it's the 'golden rule', those with the gold weren't about to let another 'Corporate bailout' take place when they could almost effortlessly put American people on the hook for it.

The corporate bailout of Long-Term Capital Management took place in 1998; the passage of the Commodity Futures Modernization Act of 2000 followed shortly afterwards, with the 'free market fundamentalists' likely professing, 'Never Again!'.

https://en.m.wikipedia.org/wiki/Long...t#1998_bailout

The 'free market fundamentalists' (Mr. Greenspan is just one, albeit one who acted as priestess) have been thoroughly discredited by the economic realities of the past 3 or 4 decades, but, much like fanatics, they cling to their beliefs, as if economics was a religion.