The stock market has been rising because the Fed's QE has served to stimulate it with billions of newly created money. That being the case, why wouldn't the stock market continue to rise forever? One reason is that the Fed is continuing to taper at each successive Fed Open Market Committee (FOMC) meeting. The Fed likely will discontinue its stimulative actions by the end of 2014.
But for the sake of argument, suppose the Fed reverses its plan and simply continues with QE? Why wouldn't the market just continue to rise? At some point, like a child building a tower of blocks, the structure becomes top-heavy and keels over.
Another point: as the Fed continues to create QE, this means that billions of additional dollars are created "out of thin air." This puts increasing downside pressure on the dollar. Even now we see the dollar index sinking in the face of additional dollars ... Log in or subscribe to continue reading.
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