interest rates so the bubble is going to get ever bigger.”
Seems like a perfect system but for the glaring flaw Kumar says has been in place since the inception of easy money on what he calls “Lehman Day,” September 15th 2008. The Fed’s balance sheet has quintupled but the equity markets and other benefits haven’t kept pace. Nature abhors imbalances. Imagine your shins growing to twice the length of your thighs or a tree with branches thicker than the trunk and you get the basic idea of the financial abomination purists see when they look at the Fed’s balance sheet gigantism.
Of course the $4 Trillion question is how this ends when the Fed eases off the gas in October. Kumar has a guess but it’s not going to make bulls happy, particularly those who’ve started eyeballing the next Big Round Number as a target for the Dow Jones Industrial Average (INDEXDJX:.DJI).
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