The Fed Spreads Panic

Broad stock-market indices began on Friday to rebound from coronavirus panic. The rebound continued yesterday with huge gains. And it was continuing nicely this morning — until the Fed announced a rate cut. Bang! The bottom fell out of the market, for no good reason.

It’s not unusual for a rate cut to send stocks down because a cut implies that the Fed “knows” that the economy needs a boost. In this case the boost was “needed” because of the economic effects of coronavirus. The Fed, of course, knows next to nothing about “managing” the economy, as has been shown time and time again. Chalk up another bonehead play for the Fed.

See “Mr. Greenspan Doth Protest Too Much“, “The Fed and Business Cycles“, and “Money, Credit, and Economic Fluctuations“.