Former Dallas Federal Reserve President Richard Fisher made sound remarks when discussing the current market meltdown with CNBC on Tuesday.
Although he is incorrect in his assertion that the United States central bank will do what’s right for the national economy and avoid monitoring daily activity reports, he was right that investors are addicted to easy money from quantitative easing, otherwise known as QE.
“I don’t think there is a single member of the FOMC that’s going to react to one day’s market activity,” Fisher told the business news outlet. “Nobody on that committee would like to see that continue, they’d like to find the right exit point and they’ll see what it is.”
With that being said, Fisher does think the stock market crisis is an illustration of the way traders and investors think and behave today.
“It does demonstrate that people are hooked on the heroin of quantitative easing,” he said.
Fisher may argue the Fed will focus on the “good that’s going on in the economy.” But David Stockman, former Reagan budget chair and bestselling author of “The Great Deformation,” believes the Fed will employ a number of manipulative tools to contain “the giant financial bubble.”
“So now comes the era of gluts, shrinking profits and a drastic deflation of the giant financial bubble that the world’s central banks have so foolishly generated. And this time they will be powerless to stop the carnage,” he wrote in an op-ed.
“Yet the beleaguered central bankers will launch desperate verbal and market manipulation ploys to brake the current sell-off and thereby preserve the bloodied remnants of their handiwork. When in response the gamblers make their eighth run at buying a dip that is now rapidly turning into a crater, it will be an excellent time to sell anything in the casino that isn’t nailed down.”
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