Peter:
A.G. is in a terrifying box in my opinion. He knows he's got a stock market bubble and he hates the $#%@# thing, but he is stuck with it, because if it lets go, the wealth effect evaporates, consumers put mattresses against doors, and the economy tanks.
The box is also taped shut at both ends. He can't afford the risk of damaging the foreign flow of funds, so interest rates can't be reduced much now. On the other hand, plowing dough into the banking system is just providing more liquidity with which the balloon is further inflated.
I don't know what he can do now. In a way, it may not matter, as much of the money printing game is out of his control in any event.
If he is to try to do anything, it would make sense to attempt to dampen the market. Not easy to do, without pricking the balloon.
Best, Earlie |
