“The current plan is that–so long as the economy doesn’t crash–the Fed will taper to $25 billion in August, then $15 billion in September, and then wipe out the remaining $15 billion in October. Here’s a chart showing the behavior of the S&P500 versus the monetary base. It used to be the case that the stock market bounced around with little relation to the Fed’s asset purchases. But since early 2009 and the introduction of QE programs, the stock market and the Fed’s bond buying have moved in virtual lockstep. Let me ask you this: Do you think the S&P should be hitting all-time highs because of how great the underlying economic fundamentals have been the last few years?”
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