Even The Big Banks Now Admit It: "This Is How The Fed's 'Massive Manipulation' Broke The Market"

And a bonus post-script from BofA:

Central banks have had a tremendous impact on financial markets in the last seven years, which is never more apparent than when looking at the world through the volatility lens. As shown in Chart 12, cross-asset volatility reached all-time lows in the summer of 2014, falling even below the 2007 pre-GFC bubble lows, crushed under the weight of unprecedented monetary policy (or in the ECB case, the promise of policy). This is remarkable considering the size of the risk “bubble” created pre-GFC.

 

The result is that risk is not fairly priced based on fundamentals but rather is better explained by investors not wanting to stand in front of central banks as they embark on QE.

Our job here is done.

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Gary Anderson 4 years ago Contributor's comment

So, investment banks push asset prices up and central banks deflate that when deemed necessary. Well, it is better than 200 dollar oil!!

Gary Anderson 4 years ago Contributor's comment

Also, this means, Tyler, that the Fed mispriced risk in the housing market by defrauding with their Gaussian Copula. The MBSs that went bad were mispriced as to risk. This means the housing bubble was PREMEDITATED.