Free money is a hell of a drug. It keeps a party going. But when it’s gone and the lights come up all that debt doesn’t look as pretty as it once did. One remembers all of a sudden all the stupid things one did under the influence, and even worse that those actions have consequences.
Is it really the end of the party? Is Yellen really going to do it?
She may want to, but the addiction may once again prove too strong and the Fed may once again dim the lights and turn the disco ball back on. But even then, how much longer can the dancers dance?
Free money – again – is a hell of a drug.
It’s worth noting that this “end of the party conundrum” is exactly what many people in more sober economic camps said 6 years ago would happen as the Fed sought to exit ZIRP. (Zero Interest Rate Policy.)
(From The Telegraph)
At best we are entering a new financial order where there is no longer an automatic “Fed Put” or a “Politburo Put” to act as a safety net for asset markets. That may be healthy in many ways, but it may also be a painful discovery for some.