It seems we are in the midst of the authorities trying to unscramble an omelette. Not realising just how dire the world's house of cards that is our financial system is, the Fed has unwittingly reopened the Pandora's box it so amazingly managed to contain following the 2008 GFC. Their latest efforts make that earlier policy success look like good luck rather than good management.
I remember when the wheels fell off in 2008, the Fed was late to understand what market dynamics were unfolding and everyone was looking for an explanation - what caused it. It happened because it was always going to happen. It is embedded in the market structure. The Fed bought a few years by calming everyone down with beautiful displays of many wonderful garments made from the QE Quality Emperor's New Clothes. Even though it was never a solution, it did mesmerise the panickers. It seems they now have heard the fingers click, woken up and the desire to sell has returned undiminished.
This effort to try and unmix the omelette might buy some time - like a day or two - but the debt deflation dynamics that have been overhanging the market is at best unchanged from 2008 and if anything has intensified. Bernanke was a witless catalyst to shoot the starting gun.
Fascinating period ahead... dare I say unprecedented?
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