Everytime The Fed blows bubble every time it bursts into their faces

[Clubber Lang]

Everytime The Fed blows bubble every time it bursts and everytime the traders profitted massively from market movement.

Truth
2000 and 2008 were my best P&L years ever

 

[Overnight]

...
We haven’t even had a bear market (20% down) in 12 years. By far the longest on record.

Yes we did, on Dec 24th, 2018. One day! Doesn't that count? Tehee.

 

[ElCubano]

If you mean that had the Fed not intervened to assure adequate liquidity in markets -- one of their main functions -- the markets would stop functioning well and there would have been negative repercussions for the equities markets, I can't disagree. But that would have been irresponsible action by the Fed having nothing to do with the fundamental reason for markets becoming overbought. The Fed and SEC may fairly be blamed for not acting to counteract a bubble that is threatening to grow too big. But is it incorrect to blame them for formation of the bubble in the first place?

If you really want to understand the formation of market bubbles as a natural consequence of a capitalist economy* then I can not recommend too highly Soros's Second lecture at the Central European University. [see Amazon books]

* "When Alan Greenspan spoke of irrational exuberance in 1996, he misrepresented bubbles. When I see a bubble forming I rush in to buy, adding fuel to the fire. That is not irrational. And that is why we need regulators to counteract the market when a bubble is threatening to grow too big; we cannot rely on market participants, however well informed and rational they are." -- George Soros, "The Soros Lectures at The Central European University", Pg. 33, 2010.
​

How does the FED counteract?

 

[Vietcong]

Dear my comrade
FED is not the hero we need but the hero we deserve. It did it's job
Remember the 1907 bank crash and 1929 stock crash ? Without central bank inject money in the system, the whole america economy destroyed. That is nearly 100 year ago, when globalization is nothing but war, invade, and enslave other countries. Yet, the rise of Hitler have some tailwind thank to America economic crash, Germany was forced to pay it debt with it devastated economy, and when America capital pulled out the economy of Germany totally destroyed. And you know what happened next when people don't have work & food, my comrade
Now imagine the liquidity crisis happened again in this globalization era, the ripple damage not only harm US economy alone but the whole world aswell, just like you are driving a schoolbus full of student at 200mph and someone brake-check you
Yes, it's bad that the FED keep lowering rate, but the economy's now like a junkie who got high all the time (QE, low FED rate), he can die of shock if you suddenly cut his supply
And my comrade you don't want to see you hard-earned allies turn to China for help

 

[piezoe]

How does the FED counteract?

Rather than just repeat or paraphrase what has already been said about Treasury-Fed-SEC- tools available to let some of the air out of bubbles, I will refer you to pages 41-45 of The George Soros Lectures at the Central European University. This little book is available for a few dollars on Amazon. The primary tools, of course, should be aimed at reducing the amount of leverage. And of course one of the first things that should come to everyone's mind in that regard are the margin requirements; yet another are the minimum capital requirements. But this barely scratches the surface of what is available to our regulatory bodies.

These tools however need to be judiciously applied early on in the formation of bubbles and not delayed until the bubbles have ruptured, at which point they may be harmful rather than helpful... Needless to say, politics must be excluded from influencing our regulatory bodies..