Jake's View | Fed's fear of Wall Street distorting global economy
Don't expect new chief Janet Yellen to end easy US money policy that only benefits speculators
Dow, S&P hit records, world shares near 6-year high on Beijing reform and US stimulus hopes
I would skip the bit about Beijing reform. Markets that pay any attention to Beijing's announcements actually dropped a notch when President Xi Jinping said last week that he would more efficiently preserve an inefficient economy but then didn't say quite how.
The running is actually all down to Janet Yellen, the presumed successor to Benjamin Bernanke as head of the United States Federal Reserve Board. In so much Fedspeak (actually the proper dialect for a central banker) she as much as promised to keep interest rates low indefinitely.
This has been the theme of US monetary policy for more than 20 years. Every now and then the Fed says: "Maybe it would be best for us to run things a little tighter just now." Whereupon financial markets say: "Boo!" The Fed then says: "Well, maybe it wouldn't be after all."
It's a classic case of putting the cart before the horse. Elsewhere in the world, central banks discipline the market. In the US, the market disciplines the central bank.