Rumors today that the Fed might embark on another buying spree resuscitated the equity markets.
But a phony buyer of US Treasuries cannot make a difference in the end.
The result of the last intervention (QE II) was to cheapen the dollar, spark commodity inflation, and, as a by-product, bloat equity prices. Throw the excess at equities (which would other wise go wanting).
We have no need for liquidity. The Fed can make noise but can deliver nothing of substance.
Robert Craven
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