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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