While the U.S. Federal Reserve has begun to reverse its easy money policies, other central banks around the world increasingly see such policies as an economic elixir.
Liquidity moves markets!Follow the money. Find the profits!
And that will serve as fuel for the world’s stock markets, Money Morning Chief Investment Strategist Keith Fitz-Gerald said in an appearance on CNBC‘s “Street Signs” program.
“The Fed has led the way, and the BOJ [Bank of Japan] and the ECB [European Central Bank] have no choice but to follow in its footsteps,” said Fitz-Gerald, a seasoned market analyst with 33 years of experience. “That’s going to unleash a fresh round of opportunity.”
Easy money policies appeal to governments because they pump money into the economy. They also make imports more expensive and exports cheaper because they lower a currency’s value versus other currencies.
But as more central banks start using the same policies, the advantage is lost. That makes them ramp up the easing even more.
“It’s kind of a race to the bottom,” Fitz-Gerald said. “The policy is more like ‘what can you do to your neighbor and get away with it.’ ”
As central banks compete with each other in liquidity pumping, stock markets will reap the benefit.
To find out how investors can profit from this situation, watch the following Fitz-Gerald interview.
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