The Fed's decision to delay the inevitable, the scaling back of its stimulus program, reinforces our view as to the relative shakiness of the US economy

Gavin Wendt

The Fed's decision to delay the inevitable, the scaling back of its stimulus program, reinforces our view as to the relative shakiness of the US economy. Trillions of dollars worth of hand-outs, bail-out and stimulus to high-risk corporates that were deemed 'too big to fail' has led to the US market hitting record highs. But a booming sharemarket doesn't reflect a healthy and sustained recovery. The US is essentially a market that's been pumped to the max with Fed-administered financial steroids, but like the steroid-addicted athlete, exactly how sustainable is the performance and how dangerous are the unintended consequences?


Gavin Wendt

I have been a senior resources analyst following the fortunes of the mining and energy sectors for the past 25 years - previously working with stockbroker Intersuisse and financial group Fat Prophets. I am also Executive Director, Mining & Metals...

Expertise

No areas of expertise

Comments

Please sign in to comment on this wire.
Medium 82f2d84374b557bd2b5ccd93917d8c7e1379280233

Jay Soloff

However, the most realistic worst-case scenario for the Fed's actions is higher than desired inflation. The Fed does have a relatively successful history of being able to control inflation. Moreover, you could argue the Fed isn't doing enough to promote higher inflation - which would both erode debt overhang and savings - and should lead to greater consumer spending.

Join the conversation