New Normal, Another Bubble

Believers in the New Normal hold that the Fed and other central banks have an unlimited ability to print money and buy assets, such that they can buy up the majority of markets to keep valuations elevated. I see such linear thinking as dangerously simplistic in a non-linear world, and I make the case that the Fed is far more constrained by the bond and currency markets (recall that all these markets are interconnected) than the New Normal faithful believe: The Fed’s Hobson’s Choice: End QE and Zero-Interest Rates or Destabilize the Dollar and the Treasury Market.(source infra)

The Inevitable Stock Market Reversal: The New Normal Is Just Another Bubble Awaiting a Pop Washington's Blog: "The Big Question: When? Is the New Normal enforceable even as markets reach extremes, or is the faith in the central banks’ power to bend markets to their will just the latest manifestation of hubris? No one knows at the moment, but as this article has shown, there are numerous persuasive reasons to be skeptical of the New Normal faith that markets can only loft higher in a permanent state of low volatility and rising profits." (read more at the link above)

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