this post was submitted on 26 Aug 2024
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The way the western economy is tied together through stock markets though means that one company or hedge fund failing because one manufacturer goes down, will cause a domino effect (either due to panic or interconnected stocks). That's the fear anyway. We've seen exactly that when Intel's stock went down, which was only mitigated by the Fed printing money and silently propping up the stock market.
I agree the stock market is a big influence of the economy. Stocks are massively overvalued. There's not enough available cash in existence if there's big sell off on a major stock like Intel. Hence the need to print money. If the Fed didn't intervene, that illusion of stocks actually having cash value would vaporise.