The Fed owes the American people some plain-speaking

Financial Times/Gillian Tett/5-5-2022

graphic image of people joining hands to cross ravine what happens when the last man steps off?“But the reason why plain speaking is needed is that a dozen years of ultra-loose policy has left many investors (and households) addicted to free money, and acting as if this is permanent. Moreover, since the Fed has repeatedly rescued investors from a rapid asset price correction in recent years — most recently in 2020 — many investors have an innate assumption that there is a Fed put’.”

USAGOLD note: Tett puts her finger squarely on the problem not just in the United States, but in most of the industrialized economies. As markets attempt to factor in the most likely direction of central banks, including the Federal Reserve, Citibank’s Matt King points out that “the reality is that tightening hasn’t really started yet.” Watch out when it does……

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