from Hacker News

Stocks Might Be 50% Lower Without Fed

by adventureful on 7/12/12, 10:26 PM with 2 comments

• by bediger4000 on 7/12/12, 10:50 PM

  I'm no stock market or finance expert, but this seems a bit simplistic. CNBC just subtracted any stock price index gain from 24 hours before a Fed announcement. I don't think they added back in any price index loss from 24 hours after. Which seems to me to make the "price indexes lower" conclusion sort of a necessity of the arithmetic.

• by washedup on 7/12/12, 10:40 PM

  this makes perfect sense. the Fed, over the last decade, has run a policy of credit expansion, followed by liquidity expansion since 2007. this is always priced in as a positive movement in equities, but many people believe that this is an illusion, and that "inflating" the preceived value of a stock has nothing to say about the true value.