This article explores the reasons behind the continued speculative activity in the US stock market despite the Federal Reserve's interest rate hikes. The author argues that the culture of state support, including market rescues and bailouts, has created an environment where investors believe that losses will be mitigated, encouraging them to buy the dips.
The writer is chair of Rockefeller International. His latest book is ‘What Went Wrong With Capitalism’ The mystery of the moment is why rampant speculation persists in the all-American bull market despite the apparent end of easy money. The exuberance was understandable when money was virtually free, but that was last decade. In 2022, the Federal Reserve began raising interest rates from near zero to almost 5 per cent.
Government spending stayed elevated well after Covid passed, leaving more cash in the hands of households and corporations. They, in turn, have invested heavily in stocks , confident that the state will mitigate losses. The bailout culture dates to the first rescue of a major US bank in 1984, and the first explicit Fed vow to prop up the stock market in 1987.
SPECULATION CAPITALISM MARKET SUPPORT US ECONOMY INTEREST RATES
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