LETTER: Beware of the Fed and easy money
Money printing induces an economic boom. That’s why our government does it. Cheap money is so much quicker than allowing the free market to act.
But the boom is always paired the bust. The boom is the fun part. Asset holders cash in. Rising prices raise wages, homesellers are smiling, and the stock market is grinning ear to ear.
But, sooner or later, the government will get scared by skyrocketing prices, and the Federal Reserve will take away that easy money. Now, prices that were lifted by the cheap money are seen to be too high and financing disappears. Those recent purchases are left high and dry as the cheap money pool is drained away.
So enjoy the boom and invest wisely because you may be owning that asset for longer than you think.