A Bull Market for Wall Street, A bear market for humans (4/5)

Jerome Powell’s true first test came when the world economy pulled its brakes to deal with the Covid-19 pandemic.

As the economy came to a screeching halt and stock prices began a steep decline, Jerome Powell would soon take steps that would ‘Change the course of the fed forever’. Through a combination of Quantitative Easing and lowering interest rates, Jerome Powell conditioned the market to massive amounts of stimulus never before seen.

As the Federal Reserve continued to apply high levels of monetary stimulus to further raise asset prices and support growth, some observers perceived a disconnect between asset prices and the economy. A bubble was beginning to form…

Powell simply argued that the Fed’s dual mandate of stable prices outweighed the concern over asset inflation and wealth inequality. As of November 2021, pressures on Jerome Powell to slow the rate of Quantitative Easing and mounted.

Inflation hit 6.8%, the highest in 40 years. Bloomberg news called Jerome Powell ‘Wall Street’s Head of State’ due to how profitable his actions were for Wall Street.

2020 may have been a bull market for Wall Street, but it will be remembered as a bear market for humans.

Jerome Powell’s effect on financial markets drew similarity to the infamous ‘Greenspan Put’ that led to the 2001 Tech Bubble.