This is a follow-up post to my earlier post on Fiscal Deficit hitting several countries in the West. Today I got to read about the rise in US stocks after US Federal Reserve chairman Ben Bernanke set a timeline for not rising the interest rates.
When look at the face, it seems a good idea as lower interest rate keeps enough liquidity in the market. This is likely to loosen pressure on the Financial institutions and thus help economy grow.
But, wait a min. When does a Central Bank raise interest rates? It is always at good times, when economy is growing and inflation chances increase. So is Chairman Bernanke saying that Economy is going to stagnate for next 2 years? Probably, YES!
Japan has the lowest possible interest for more than a decade now, and is that a good sign? No Economist will say it is. But US market rose sharp with the news flowing yesterday.
Why is market running on the hype of Economic positivity on Fed’s remark of not rising interest rates? This is nothing more than just stupidity, ignorance and greed.
The market has become so irrational and ill-intentioned that all the learning we have got from 2008 crisis has blown away. This is a serious scene, and I am afraid that Democratic and Free Market Policies altogether are failing.
There was an old saying – when a big system is poised to fail, first the logic stops working, second the supporting systems fails and ultimately the castle collapses. If the Market Capitalism has to survive, the logic should overpower and supporting systems strengthened, else the deadly crisis is awaiting.