The stock market keeps falling and falling because, for the first time in 14 years, there is nobody there to catch it.
The “Fed put” has expired.
The genesis of the Federal Reserve’s implicit put—the notion that the Fed will fix any decline—was the 2008 Financial Crisis. The financial system was on the ropes and the stock market itself became “too big to fail” as far as the Fed was concerned. Then-Chairman Ben Bernanke printed a bunch of money, boosted the market and was heralded a financial hero.
Since then, the Fed has been reluctant to let the stock market drop.… Read more