In an interview with Rick Santelli, former Dallas Fed President Richard Fisher discusses the excessive influence that central banks have on markets. Acknowledging that “monetary policy around the world, including here in the United States, is leading to a distortion in the way moneys are distributed… inflating the price of securities or anything that trades…” he advocates that the Fed raise interest rates in June. Though he advocates normalizing policy sooner rather than later, he also warns “When they move (the Fed)… there will be a settling in of the market place. There will be a correction. Suck it up, that’s reality”.
How easy it will be for markets to ‘suck it up’ will of course be a function of how large the correction is. With central banks holding $23 trillion globally, lets hope that the size of the correction isn’t proportional to the size of the manipulation.