Why are the speculators still running in the wild when the money is no longer free

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The writer is the head of Rockefeller International. His last book is’What is wrong with capitalism?‘

The puzzle of the moment is the reason for the continuing speculation of the US bull market despite the end of the money. The abundance was understood when the money was almost free, but that was the past decade. In 2022, the Federal Reserve began raising interest rates from zero to approximately 5 percent. However, after a short stop, the speculation activity increased again through many chapters of American origins, led by artificial intelligence plays and Mimi.

One answer is that the era of an easy money has ended only partly. It was always based on an increasing network of government and central bank support including market rescue operations, companies and banking rescue operations, constant motivation, and of course, register low rates. Only very low rates have disappeared. The rest of the culture continues to decline in the basic belief of the markets of the market that nothing will be allowed to make a mistake.

Today, most interpretations focus on the unusual faith in the American market on the flexibility of its economy-supported by its main role as a creator in artificial intelligence and is now protected by a pro-business president. But the speculators were running in the wilderness before Ai Mania seized the American market in 2023, and a long time before Donald Trump restored the presidency. Something deeper than Trump and AI at work. Social media embodies speculation enthusiasm as BTFD: “Buying Decreases.”

The more the bull continues, the more investors are to buy any decline. Over the course of last month, the market suffered from short setbacks from dangerous news The Chinese challenge of American artificial intelligence dominance And on the Trump tariff. Then the retailers rushed to buy shares as it had not happened before. Among the five largest days to buy retail this contract, four erupted in the past five weeks.

Perhaps the only thing Trump loves more than customs tariffs is stocks, so it seems that investors assume that his administration, even more than its predecessors, will not let stock prices decrease. BTFD depends on the same basis as the American economy: state support.

To maintain alive growth during the epidemic, the Federal Reserve has achieved huge amounts of liquidity in the system. Through some measures, many of them still wander through Markets. Government spending remained high after Kofid has passed, leaving more money in the hands of families and companies. They in turn have invested extensively in shares (or shares re -purchases), confident that the state will reduce losses.

The culture of rescue is due to the first rescue of a major American bank in 1984, and the first is explicit feeding He pledged to support the stock market in 1987. Since then, rescue operations have grown more generous and automatically, encouraging more speculative parts and market evaluations steadily. Investors have seen asymmetric risks, with a government ceiling on losses and lack of borders on the gains.

Open sellers, who are betting that turbulent arrows will decrease, are the death strain in a market that allows the government to move in one direction only: UP. As the economy is strong and supported by the state, the rate of US business bankruptcy is close to record (outside the epidemic). With the assumptions most likely, lenders barely charge any loans for companies, or not.

During the epidemic, unprecedented cash payments flowed into the hands of consumers who, stuck at home, in investing in a game, dealing with the markets as an adventure park. This search for excitement stopped when the Fed for the return of federal feudal inflation to raise prices in 2022, but for a short period only. Next year, the government responded to running on Silicon Valley Bank by ensuring all its deposits. Then an additional $ 400 billion in the banking system was pumped to ensure that fear will not spread. The next summer, when the shares fell for a few days, investors have reduced a significant price reduction, the Federal Reserve delivered one, despite the sticky inflation. Again, the game was in.

Away from the anxiety about high borrowing costs, Americans adopt risky vehicles such as investment funds circulating in the field of investment funds, which now provide young investors an opportunity to benefit from bets on individual shares, including of course the most important name, NVIDIA. The encryption with names like Fartcoin has been in tears in recent months.

How can the directive assumption change – the state’s support for the dangers of speculation -? One way is that the price of money rises further, and it is beneficial to potential inflation. Another is that the financial crisis or some other shock leaves the government unable to withstand such a generous rescue and rescue. Until then, BTFD will remain a talisman for most investors.