The Federal Reserve’s stated goal of moderating the business and credit cycle while maintaining full employment through enlightened policymaking demands a macroeconomic understanding of such a comprehensive and elegant nature as to rank alongside a quantum theory of gravity. It also offers a hypothesis to explain the surprisingly resilient decoupling of risk assets from fundamental reality.
While I hate to add to the heap of market-as-degenerate gutter drunkard analogies tossed around by the media and punditry (especially in my first post), here’s one more for you:
The old notion that the Fed’s job is to ‘take away the punch bowl’ before the party got out of hand seems a bit outdated given the unprecedented scale of government involvement in capital markets. The events of the past year have generated a policy response more akin to throwing a carte blanche booze and drug bonanza with the hopes that you’ll be able to gradually cut off the raging crowd before anyone gets out of control and your place is burned to the ground. Think something between a Big-10 game day kegger and the party Jonny Depp throws in Blow.
2&20 Vision 