Earlier this week I had the pleasure to discuss a recent post, “The Markets go to Rehab”, with Malcolm Palle, founder of the Mining Maven. If you would like to listen to the interview, you can click on the Soundcloud box below.
Recent market action highlights that the markets are increasingly dependent on an easy money environment. The question for investors is whether the Fed will stay the course (continue to tighten monetary conditions, i.e. send the markets to rehab) or buckle under the pressure and fail to shut off the tap. The issue is complicated by the extraordinary expansion of the monetary base over the past eight years and the problems that will be created if the Fed does not reverse this expansion.