Well the stock market has gone up again and it is not because of market good news. No, it is up because the Fed is hinting that it is flexible on lowering interest rates once again. As I said before, it is not because of good news, economically that the market is up but because there are lots of people that think that they don't have to worry about the government allowing the problems of the market to work their way out as it should do. It is likely that the market will have to pay for the sins of interference later and at that point the pain will be lots worse. No one can always get it right but when the Fed, which is not supposed to interfere this much, does interfere, it is messing with market dynamics.
Every time they try to fix things the more it can go off track. No it does not go allot off track. It is more of a cumulative thing. The Fed is reacting to political pressures and not to the real market pressures. This can not go one forever. I would like to say that it will start to correct itself soon but it not probably do much until there is nothing the Fed can do but bite the bullet. The way the dollar is going it may be sooner that we think.
Remember that our dependence on foreign currency weakness (cheap labor and materials) is about to end. The worlds other currency are getting stronger and ours is getting substantially weaker. At some point it should cause severe problems and we may sink into a lower level of subsistence. I know, doom and gloom, but this is what I see because of economic weakness.
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