Source:Â Wikipedia
Dear Diary,
And so it came to pass that investors saw a bright star in the East… directly over the Marriner S. Eccles Federal Reserve Board Building, at the corner of 20th Street and Constitution Avenue in Washington, D.C.
“What comes after me goes before me,†said Janet Yellen, so confusing investors that they bid up the Dow over the 18,000 mark, a new milestone and a new record.
It is the season of miracles. Investors are convinced that Ms. Yellen can perform a trick worthy of Christ Himself.
It was He who multiplied the loaves and the fishes… made the blind see and the lame walk… and turned water into wine. It is She who creates real wealth out of nothing.
At least, that is what the common folk believe. And the wise men too.
For it was neither something solid nor important that made stocks more valuable last week; it was something gassy and impossible.
Wealth Without Work
Federal Reserve policy is the opiate of the people, the cynics will say. Maybe so.
They may not understand its mysteries, but they like it. After all, it promises wealth without work… or saving… or self-discipline… or investment. The wealth just comes, by the grace of Janet Yellen and her fellow Fed governors.
Last week, it came in abundance.
“Hallelujah,†said equity investors.
Ms. Yellen let it be known that she would be patient about letting interest go whither they wouldst.
She’s got them right where she wants them. And she intends to hold them there until she’s sure the lean years are over… or until Kingdom Come… whichever comes first.
We are convinced that holding interest rates down does indeed increase the likelihood of a bubbly stock market. But we are damned if we can understand how twisting interest rate arms makes businesses more valuable. As near as we can make out, it merely puts their shoulders out of joint.
This is an age of wonders. Anything is possible.
