The fed has already backed itself into it's corner for a while. The lockdown only speed up the process. Steven Van Metre has proved with real economic data how there is a liquidity trap. Most of the economic indicators specify that we are heading towards deflation. Right now the long end of the bond curve and the short end of the bond curve are split apart in two different directions. Eventually one will pull it towards one side and the market will definitely suffer huge backlash when it does.
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Many believe that liquidity track was formed two decades ago. This is not a recent event. When they tried to tighten a couple years back, the markets reacted aversely. Thus, they have to keep easing.
Rate are already rising on the 10 year which could foreshadow a lot more pain for the markets and economy. In my view, with so much debt, we simply cannot absorb higher interest rates.
The real estate market would collapse almost overnight.
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Yes I have heard from a few bond experts that when QE started, it started the liquidity problem. According to their reasoning, QE is deflationary and by taking dollars away from the pool of available dollars, it removes liquidity. This in turn has caused a dollar shortage and reduced the velocity of money to it's lowest point in history (which we are currently living through).
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@jfang003 personally I do feel some sense of arrogance in the way the Fed loves to handle things,they tend to act like they are not willing to listen to corrections or opinion from others....and that is really affecting them in a negative way....