Thursday, June 13, 2013

Fed`s Liquidity Injections Are Not Creating Credit For The Real Economy

The problem is that the Fed's liquidity injections are not creating credit for the real economy, but rather boosting leverage and risk-taking in financial markets. The issuance of risky junk bonds under loose covenants and with excessively low interest rates is increasing; the stock market is reaching new highs, despite the growth slowdown; and money is flowing to high-yielding emerging markets.