Re: Fed Governor Raises the Specter of a Bubble in Junk Bonds
Dear Sirs:
So the Fed thinks that it just might be possible that its unprecedented bond buying programs will cause a bubble in junk bonds. How many Fed economists does it take to screw in a light bulb? And will the light actually come back on with a new bulb installed? If you are a Fed economist, these things must be tested and tested and tested and….
When the Fed finds evidence of such a bubble, of course it will be too late. And if it takes regulatory action to prevent its base money production from going into junk bonds, the money just will go somewhere else. It must go somewhere! Isn’t that the point?
The Fed has no idea what it is doing or what the consequences will be. Nevertheless, when the markets crash, the Fed will blame everyone but themselves. Patrick Barron
