Ok, so you messed up your knee and got surgery. The doc hands you a crutch and tells you to use it for six or eight months and your knee’ll be as good as new.

What the doc should have done is to work out a post-surgery physical therapy protocol that would have been painful and annoying but which would actually have made your knee “as good as new.” But he didn’t because he’s one of those docs who thinks the human body can’t fix itself without his personal intervention.

Eight months later the doc yanks the crutch out from under you and your knee collapses and you bang your head against the wall and need to start looking for a head doc.

Substitute the Fed for the doc, QE for surgery, and the financial markets and US economy for the patient and you have a nearly perfect analogy.

 

(1) Postito: A short blog post in which the text is sometimes briefer than the title.

 

Next up: What’s So Bad about Recessions?

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