Re:China stock trading halted early after 7% plunge again
by simonh on Thursday January 07, 2016 @03:18AM
(#10856679)
No, they do exactly the opposite. They act to moderate the market. When markets are down they drop interest rates to stimulate investment, but when markets are booming they raise interest rates and limit the money supply to try and calm them down. Western economists and central bank leaders are very well aware of how damaging over inflated markets can be and one of their primary goals is to moderate the boom and bust cycle.
[ Parent
| on HN ]
Re:China stock trading halted early after 7% plunge again
by dnautics on Thursday January 07, 2016 @03:53AM
(#10856824)
That's the narrative, yes, but given that the market has been bull for six+ years and the Fed only recently raised rates, and not by much (real rates may still be negative)... The evidence does not support your assertion
Re:China stock trading halted early after 7% plunge again
by sleeping_pills on Thursday January 07, 2016 @04:24AM
(#10856934)
You provide zero evidence that the US stocks are overvalued (I'm not saying they aren't) so you should refrain from demanding evidence from others.
Furthermore, why do you think the FED should've raised raters earlier? Supporting the stock market is not their mandate and it is thus not directly relevant whether and how long has the current bull market lasted. A big market crash just a few years after 2008 (and 2011) would've certainly had a dampening effect on recovery so they might have felt justified in increasing the money supply. Inflation is running low, economic growth and labor markets were very weak for many years after the 2008 crash. They had pretty good reasons to be supportive.