There are many people, smart people even, that say the markets multi-year bullish phase is caused by many things other than the FED printing billions of dollars each month to buy some form of debt or another.
My favorite is an article that says the market are up 130% because earnings are up 130% during these few years. Over 80% of the gains in earnings come from the giant TBTF banks as they utilize every trick in the book to show profits. Some of the accounting tricks are truly hysterical. Also, a large portion of the gain in earnings come from the money that Apple has made.
There are even folks who say that the FED is not really printing and buying assets, they are doing some other form of magic that leaves high velocity money in a narrow range. Bullshit. My disclaimer is that I am do not have a PHD in economics.
If the FED Quantitative Easing is a “grand experiment” then I have another experiment to propose within this “grand experiment”.
Let the FED cease QE. Tell Investors that it is over and that the economy is strong enough to stand on its own. You can leave ZIRP, just stop the endless free POMO money every day.
What do YOU think would happen? My guess is that we would drop a quick thousand points and recover most of it quickly, producing a lovely double top. Then Dow 10k.
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