What’s Driving Everything From a Market Frenzy to an Embrace of U.S. Deficits? Magical Thinking
Traders and politicians are making new, risky arguments about low interest rates to justify their actions
The Federal Reserve says it will keep short-term rates near zero for several years. bloomberg.
The Wall Street bulls embracing sky-high stock values and the Washington pols embracing big deficits may be ideological opposites, but they have something important in common. Both draw sustenance from near-zero interest rates which make stocks more valuable and debt more supportable. And both risk taking this basically sound logic to extremes.
The rally in everything from big tech stocks to Tesla Inc. to bitcoin are all manifestations of what Wall Street calls…
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