While I rarely read USA Today (And who does?) I cannot help but be impressed by an editorial in the paper that says the current stock market rally is a case of, as the title declares, the "Dow Jones high on Fed steroids." According to the editorial writer:
...the time is approaching to scale back the bond-buying spree and get ready to unwind some of the Fed's massive portfolio, which now tops $3 trillion. The longer the policy lasts, the more likely it will end unhappily.
It gets better:
The best indication that the Fed's bond-buying purchases are pushing stocks up artificially is that investors run for cover whenever there is a hint that the Fed might change course, as happened recently. On Monday, billionaire superinvestor Berkshire Hathaway CEO Warren Buffett told CNBC that markets are on a "hair trigger" waiting for signs of change from the Fed. The market is "hooked on the drug" of easy money, Dallas Fed President Richard Fisher told Reuters.
Fisher's comparison of Fed policies to a drug is apt. Markets might not like the idea of the drug being withdrawn now, when the Fed holds a portfolio of $3 trillion. But the withdrawal symptoms will be a lot worse once the portfolio grows to $4 trillion, or more.
Is Peter Schiff now writing editorials there? Lew Rockwell? Someone in the mainstream media, if only for a fleeting moment, is making sense. Yes, the editorial gives the usual bow to the Fed's actions that supposedly were "warranted" in the early days of the crisis, but at least the writer is beginning to understand that the Fed has no exit game that ends will.