The Fed said something that was even more important than addressing a rate hike in last Wednesday’s communiqué. It said “vulnerabilities appeared to have increased for assets valuation pressures.”
The Fed never speaks in plain English. But that means the Fed is getting nervous about bubbles (and it’s about time) in places like the stock market.
And that’s not surprising, because the Fed’s actions in keeping interest rates so low for so long have forced millions of people into the stock market who wouldn’t otherwise be in it.
It took a while. Remember, it was in 1996 that former Fed Chairman Alan Greenspan, who is most responsible for our country’s financial problems, warned of “irrational exuberance” in stocks. Four years later, the dot-com bubble eventually did pop and investors lost a lot of money.