How The Fed May Be Setting Wall Street Up For Another Crash – By Panos Mourdoukoutas Ph.D. (International Business Times) / Aug 27, 2022
The Fed’s dovish-hawkish game with the nation’s monetary policy may set markets up for another crash. It happened before during Alan Greenspan’s term with the Fed, and it may happen again during Jerome Powell’s tenure, as this game catches too many traders on the wrong side of the market and forces them to liquidate their positions.
Anyone following the Federal Open Market Operation Committee meetings, which design the nation’s monetary policy, in the last couple of years should have noticed an inconsistency in how the Fed approached the spike of inflation, swinging back and forth between dovish and hawkish positions. For instance, a couple of years ago, the Fed talked about inflation being a “transitory” problem caused by temporary supply chain bottlenecks.
Therefore, it saw no need to change the ultra-accommodative monetary policy it launched during the pandemic recession.
Fed’s dovish approach to inflation set Wall Street up for a big rally, which spread across all asset categories, with bitcoin approaching $70,000. The rally included meme stocks, which reached stratospheric valuations, as they were enough speculators with sufficient cash to chase after their shares
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