Imagine your son or favorite nephew (or any one you love a
lot and are in charge of caring for) is hooked on drugs! Doctors have told you
that if he continues with this habit, his end is near. There are two ways to
cure him of his addiction. One is by taking away his stash of drugs -which will
in the short run aggravate his condition and make him more violent and increase
your task of caring for him. You may have to probably give up your day job to
care for him. A painful process for both. The other way is to say, ”YOLO -You
only live once!” and let him continue on his drug habit- in fact supplying him
more, to ensure that he is apparently happy, while you can go about your daily
business! What would you do?
Now, replace the addict with the “Markets” and yourself with
the “US Federal Reserve”. Yesterday the FED decided to keep the taps flowing. What’s
flowing out of the tap was once antibiotics for the market (QE). It has now
become pure opium! And the markets are cheering that the taps will continue to
flow! Come on you faceless Market! The US Fed just said that they are not sure
of growth prospects for the world’s largest economy. In fact they trimmed the
growth forecast. So what the hell are you cheering about?
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