Seeking Alpha – To taper or not to taper is the obvious short-term catalyst moving the market. Beneath the surface, however, a deeper issue is at play. Under Ben Bernanke’s leadership the Federal Reserve has evolved into the world’s largest, most activist hedge fund. No longer do we rely on the Fed to simply set interest rates, QE 1, 2, 3 and 4 changed that.
This recent $85 billion monthly purchase plan of treasuries and mortgage backed securities has evolved the Fed from participating in markets as a rule setter/referee into a primary participant. What’s wrong with the Fed becoming the world’s largest hedge fund? Where to begin.