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{"i18n":{"language":"zh_CN"},"detailType":1,"isChannel":false,"data":{"magic":2,"id":603060686,"tweetId":"603060686","gmtCreate":1638340238486,"gmtModify":1638340238626,"author":{"id":4090580354975560,"idStr":"4090580354975560","authorId":4090580354975560,"authorIdStr":"4090580354975560","name":"FionBai","avatar":"https://static.tigerbbs.com/b95d850dba878781b5dde71a539605b6","vip":1,"userType":1,"introduction":"","boolIsFan":false,"boolIsHead":false,"crmLevel":11,"crmLevelSwitch":0,"individualDisplayBadges":[],"fanSize":19,"starInvestorFlag":false},"themes":[],"images":[],"coverImages":[],"extraTitle":"","html":"<html><head></head><body>Ok</body></html>","htmlText":"<html><head></head><body>Ok</body></html>","text":"Ok","highlighted":1,"essential":1,"paper":1,"likeSize":6,"commentSize":3,"repostSize":0,"favoriteSize":0,"link":"https://laohu8.com/post/603060686","repostId":1194422030,"repostType":4,"repost":{"id":"1194422030","kind":"news","pubTimestamp":1638340059,"share":"https://www.laohu8.com/m/news/1194422030?lang=zh_CN&edition=full","pubTime":"2021-12-01 14:27","market":"us","language":"en","title":"Is It Good Public Policy To Prop Up The Stock Market?<blockquote>支撑股市是好的公共政策吗？</blockquote>","url":"https://stock-news.laohu8.com/highlight/detail?id=1194422030","media":"seekingalpha","summary":"Summary\n\nShould policymakers prop up the stock market when it appears to be in danger of crashing do","content":"Summary<blockquote>总结</blockquote> <ul> <li>Should policymakers prop up the stock market when it appears to be in danger of crashing down?</li> <li>President Biden has a number of reasons for wanting to keep inflation in check.</li> <li>The market should be permitted to price stocks properly, which it cannot do if policymakers knowingly promote policies that they believe will keep stock prices up.</li> </ul> Original Post<blockquote><ul><li>当股市似乎面临崩溃的危险时，政策制定者应该支撑股市吗？</li><li>拜登总统有很多理由希望控制通货膨胀。</li><li>应该允许市场对股票进行适当的定价，如果政策制定者故意推行他们认为会保持股价上涨的政策，市场就无法做到这一点。</li></ul>原帖</blockquote> By Rob Bennett<blockquote>罗布·贝内特</blockquote> Should policymakers prop up the stock market when it appears to be in danger of&nbsp;crashing&nbsp;down?<blockquote>当股市似乎面临崩溃的危险时，政策制定者应该支撑股市吗？</blockquote> This comes up in regard to theFederal Reserve&nbsp;all the time. Even Buy-and-Holders get anxious about the stock market when prices reach insanely high levels. But a lowering of interest rates can cause people who don't want to remain in the stock market to remain in the stock market on grounds that the low returns available on safe asset classes are flat-out unacceptable. Price crashes do lots of economic damage. So an argument can be made that, when members of the Federal Reserve see evidence that stock prices are about to crash, they should do something to prevent that from happening.<blockquote>这个问题经常出现在美联储身上。当价格达到疯狂的高水平时，即使是买入和持有者也会对股市感到焦虑。但降低利率可能会导致那些不想留在股市的人留在股市，理由是安全资产类别的低回报是完全不可接受的。价格暴跌会造成很大的经济损失。因此，可以说，当美联储成员看到股价即将崩盘的证据时，他们应该采取措施防止这种情况发生。</blockquote> Other policymakers face similar pressures. President Biden has a number of reasons for wanting to keep inflation in check. So he could promote anti-inflation measures without even taking into consideration their effect on&nbsp;stock prices. But it is unlikely that that effect would not at least be mentioned when Biden's advisers were meeting to determine which measures to advance. Stock price crashes are widely viewed as a negative. So a policy that keeps stock prices up while also combating inflation is generally perceived as better than a policy that only combats inflation.<blockquote>其他政策制定者也面临着类似的压力。拜登总统有很多理由希望控制通货膨胀。因此，他可以在不考虑反通胀措施对股价影响的情况下推行反通胀措施。但当拜登的顾问开会决定推进哪些措施时，这种影响不太可能不被提及。股价暴跌被广泛认为是负面的。因此，一项既能保持股价上涨又能对抗通胀的政策通常被认为比一项只对抗通胀的政策更好。</blockquote> Policymakers Should Not Prop Up The Stock Market<blockquote>政策制定者不应支撑股市</blockquote> I generally do not go along with this widespread view. The market should be permitted to price stocks properly, which it cannot do if policymakers knowingly promote policies that they believe will keep stock prices up. So, no, policymakers should not prop up the stock market. If anything, at a time when prices are above fair-value levels, policymakers should promote policies that will bring stock prices down to levels closer to their fair value. I can not recall ever hearing a policy advocated on grounds that it will bring stock prices down. I think that's unfortunate. We should all want stocks to be priced properly. When prices are too high, we should all at least generally favor policies aimed at bringing them down.<blockquote>我通常不同意这种普遍的观点。应该允许市场对股票进行适当的定价，如果政策制定者故意推行他们认为会保持股价上涨的政策，市场就无法做到这一点。所以，不，政策制定者不应该支撑股市。如果说有什么不同的话，那就是在股价高于公允价值水平的时候，政策制定者应该推动将股价降至接近公允价值水平的政策。我不记得曾经听到过以会压低股价为理由而提倡的政策。我认为这很不幸。我们都应该希望股票定价合理。当价格过高时，我们至少应该普遍支持旨在降低价格的政策。</blockquote> But…<blockquote>但是……</blockquote> It's not quite that simple.<blockquote>事情没那么简单。</blockquote> Today's CAPE level is 39. The fair-value CAPE level is 17. A government policy that caused stock prices to fall to fair-value levels would wipe out more than half of the value of the stock market. That would cause a dramatic contraction of our economic system. Hundreds of thousands of businesses would go under. Millions of workers would be thrown out of work. Political frictions would be exacerbated. I would love to see a CAPE value of 17. But not that way. If a genie gave me one wish, I would not wish for stock valuations to drop to fair-value levels.<blockquote>今天的海角水平是39。公允价值CAPE水平为17。导致股价跌至公允价值水平的政府政策将抹去股市一半以上的价值。这将导致我们的经济体系急剧收缩。成千上万的企业将会倒闭。数百万工人将失业。政治摩擦将会加剧。我希望看到17的CAPE值。但不是那样。如果一个精灵给了我一个愿望，我不希望股票估值跌至公允价值水平。</blockquote> At least not in a rush.<blockquote>至少不着急。</blockquote> I would indeed like to see stocks priced properly. There are all sorts of benefits that would flow from that. But how we get there matters. If someone learns when she is going 70 miles per hour on the highway that her brakes have failed, she desperately wants the car to stop so that she can get out of it. But there's a big difference between stopping the car by crashing into something and letting it slow gradually to a stop by not applying any more pressure to the accelerator.<blockquote>我确实希望看到股票定价合理。这会带来各种各样的好处。但是我们如何到达那里很重要。如果有人在高速公路上以每小时70英里的速度行驶时得知她的刹车失灵了，她会非常希望车停下来，这样她就可以脱身了。但是通过撞到什么东西来让汽车停下来和通过不对油门施加更多压力让汽车逐渐减速停下来之间有很大的区别。</blockquote> We need to bring stock prices down gradually, not all at once.<blockquote>我们需要逐步降低股价，而不是一下子全部降低。</blockquote> Interest Rates And Stock Prices<blockquote>利率和股票价格</blockquote> The only way that I can see to do that is through educational efforts. I was dismayed a few months ago to see an article written by Robert Shiller that argued that, given today's low interest rates, today's stock prices are not quite as absurd as they might appear to be when only theCAPE value&nbsp;is considered. The claim is accurate. Low interest rates pressure people not to sell their stocks. So there is a correlation between low interest rates and high stock prices. But a lowering of interest rates is a desperate way to keep stock prices up. I view the lowering of interest rates as a long-term negative for the stock market because there will be a time when prices will fall anyway and a lowering of interest rates will not then be available as an option for stabilizing the market.<blockquote>我认为唯一的方法是通过教育努力。几个月前，我很沮丧地看到罗伯特·希勒(Robert Shiller)写的一篇文章，该文章认为，鉴于当今的低利率，今天的股价并不像仅考虑CAPE价值时看起来那么荒谬。这种说法是准确的。低利率迫使人们不要出售股票。所以低利率和高股价之间存在相关性。但降低利率是保持股价上涨的绝望方式。我认为降低利率对股市来说是一个长期负面影响，因为总有一天价格会下跌，而降低利率将无法作为稳定市场的选择。</blockquote> I believe that the high stock prices that applied at the last time&nbsp;interest rates&nbsp;were lowered should have been taken into consideration as a reason not to lower them. Had interest rates not been lowered, we might well have seen a significant drop in stock prices by now. That would have diminished the odds that we will see a more dramatic price drop at some future date. Which would be good news all around.<blockquote>我认为，上次降息时股价较高，应该被视为不降息的理由。如果利率没有降低，我们现在很可能已经看到股价大幅下跌。这将减少我们在未来某个日期看到更大幅度价格下跌的可能性。这对所有人来说都是个好消息。</blockquote> Perhaps the members of the Fed did indeed take that possibility into consideration when they discussed whether to take actions to lower interest rates. But, if they did, it was not widely perceived that that is what they were doing. For such actions to have their desired effect, investors need to know both that such actions are being taken and why they are being taken. It is sound public policy to keep stock prices from getting out of hand. But most investors do not see things that way today. High stock prices are viewed as good and low stock prices are viewed as bad.<blockquote>也许美联储成员在讨论是否采取行动降低利率时确实考虑到了这种可能性。但是，如果他们这样做了，人们并没有普遍认为这就是他们正在做的事情。为了使此类行动产生预期效果，投资者需要知道正在采取此类行动以及采取此类行动的原因。防止股票价格失控是合理的公共政策。但如今大多数投资者并不这么看。股价高被认为是好的，股价低被认为是坏的。</blockquote> It's big price drops that are bad. Big price drops are caused by high stock prices. So we all should view high stock prices as bad. Policymakers feel a lot of pressure not to let today's high stock prices collapse. Their job is to walk a narrow line. They should do everything they can to prevent a devastating crash. The most important thing they can do to achieve that goal is to encourage a gradual drop in prices that takes us to a place where stock prices are at least no longer entirely insane.<blockquote>价格大幅下跌才是坏事。价格大幅下跌是由高股价引起的。因此，我们都应该将高股价视为坏事。政策制定者感到很大的压力，不能让今天的高股价崩溃。他们的工作是小心翼翼。他们应该尽一切努力防止毁灭性的崩溃。为了实现这一目标，他们能做的最重要的事情是鼓励价格逐渐下跌，将我们带到一个股价至少不再完全疯狂的地方。</blockquote>","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Is It Good Public Policy To Prop Up The Stock Market?<blockquote>支撑股市是好的公共政策吗？</blockquote></title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 12.5px; color: #7E829C; margin: 0;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nIs It Good Public Policy To Prop Up The Stock Market?<blockquote>支撑股市是好的公共政策吗？</blockquote>\n</h2>\n<h4 class=\"meta\">\n\nseekingalpha2021-12-01 14:27\n\n</h4>\n</header>\n<article>\nSummary<blockquote>总结</blockquote> <ul> <li>Should policymakers prop up the stock market when it appears to be in danger of crashing down?</li> <li>President Biden has a number of reasons for wanting to keep inflation in check.</li> <li>The market should be permitted to price stocks properly, which it cannot do if policymakers knowingly promote policies that they believe will keep stock prices up.</li> </ul> Original Post<blockquote><ul><li>当股市似乎面临崩溃的危险时，政策制定者应该支撑股市吗？</li><li>拜登总统有很多理由希望控制通货膨胀。</li><li>应该允许市场对股票进行适当的定价，如果政策制定者故意推行他们认为会保持股价上涨的政策，市场就无法做到这一点。</li></ul>原帖</blockquote> By Rob Bennett<blockquote>罗布·贝内特</blockquote> Should policymakers prop up the stock market when it appears to be in danger of&nbsp;crashing&nbsp;down?<blockquote>当股市似乎面临崩溃的危险时，政策制定者应该支撑股市吗？</blockquote> This comes up in regard to theFederal Reserve&nbsp;all the time. Even Buy-and-Holders get anxious about the stock market when prices reach insanely high levels. But a lowering of interest rates can cause people who don't want to remain in the stock market to remain in the stock market on grounds that the low returns available on safe asset classes are flat-out unacceptable. Price crashes do lots of economic damage. So an argument can be made that, when members of the Federal Reserve see evidence that stock prices are about to crash, they should do something to prevent that from happening.<blockquote>这个问题经常出现在美联储身上。当价格达到疯狂的高水平时，即使是买入和持有者也会对股市感到焦虑。但降低利率可能会导致那些不想留在股市的人留在股市，理由是安全资产类别的低回报是完全不可接受的。价格暴跌会造成很大的经济损失。因此，可以说，当美联储成员看到股价即将崩盘的证据时，他们应该采取措施防止这种情况发生。</blockquote> Other policymakers face similar pressures. President Biden has a number of reasons for wanting to keep inflation in check. So he could promote anti-inflation measures without even taking into consideration their effect on&nbsp;stock prices. But it is unlikely that that effect would not at least be mentioned when Biden's advisers were meeting to determine which measures to advance. Stock price crashes are widely viewed as a negative. So a policy that keeps stock prices up while also combating inflation is generally perceived as better than a policy that only combats inflation.<blockquote>其他政策制定者也面临着类似的压力。拜登总统有很多理由希望控制通货膨胀。因此，他可以在不考虑反通胀措施对股价影响的情况下推行反通胀措施。但当拜登的顾问开会决定推进哪些措施时，这种影响不太可能不被提及。股价暴跌被广泛认为是负面的。因此，一项既能保持股价上涨又能对抗通胀的政策通常被认为比一项只对抗通胀的政策更好。</blockquote> Policymakers Should Not Prop Up The Stock Market<blockquote>政策制定者不应支撑股市</blockquote> I generally do not go along with this widespread view. The market should be permitted to price stocks properly, which it cannot do if policymakers knowingly promote policies that they believe will keep stock prices up. So, no, policymakers should not prop up the stock market. If anything, at a time when prices are above fair-value levels, policymakers should promote policies that will bring stock prices down to levels closer to their fair value. I can not recall ever hearing a policy advocated on grounds that it will bring stock prices down. I think that's unfortunate. We should all want stocks to be priced properly. When prices are too high, we should all at least generally favor policies aimed at bringing them down.<blockquote>我通常不同意这种普遍的观点。应该允许市场对股票进行适当的定价，如果政策制定者故意推行他们认为会保持股价上涨的政策，市场就无法做到这一点。所以，不，政策制定者不应该支撑股市。如果说有什么不同的话，那就是在股价高于公允价值水平的时候，政策制定者应该推动将股价降至接近公允价值水平的政策。我不记得曾经听到过以会压低股价为理由而提倡的政策。我认为这很不幸。我们都应该希望股票定价合理。当价格过高时，我们至少应该普遍支持旨在降低价格的政策。</blockquote> But…<blockquote>但是……</blockquote> It's not quite that simple.<blockquote>事情没那么简单。</blockquote> Today's CAPE level is 39. The fair-value CAPE level is 17. A government policy that caused stock prices to fall to fair-value levels would wipe out more than half of the value of the stock market. That would cause a dramatic contraction of our economic system. Hundreds of thousands of businesses would go under. Millions of workers would be thrown out of work. Political frictions would be exacerbated. I would love to see a CAPE value of 17. But not that way. If a genie gave me one wish, I would not wish for stock valuations to drop to fair-value levels.<blockquote>今天的海角水平是39。公允价值CAPE水平为17。导致股价跌至公允价值水平的政府政策将抹去股市一半以上的价值。这将导致我们的经济体系急剧收缩。成千上万的企业将会倒闭。数百万工人将失业。政治摩擦将会加剧。我希望看到17的CAPE值。但不是那样。如果一个精灵给了我一个愿望，我不希望股票估值跌至公允价值水平。</blockquote> At least not in a rush.<blockquote>至少不着急。</blockquote> I would indeed like to see stocks priced properly. There are all sorts of benefits that would flow from that. But how we get there matters. If someone learns when she is going 70 miles per hour on the highway that her brakes have failed, she desperately wants the car to stop so that she can get out of it. But there's a big difference between stopping the car by crashing into something and letting it slow gradually to a stop by not applying any more pressure to the accelerator.<blockquote>我确实希望看到股票定价合理。这会带来各种各样的好处。但是我们如何到达那里很重要。如果有人在高速公路上以每小时70英里的速度行驶时得知她的刹车失灵了，她会非常希望车停下来，这样她就可以脱身了。但是通过撞到什么东西来让汽车停下来和通过不对油门施加更多压力让汽车逐渐减速停下来之间有很大的区别。</blockquote> We need to bring stock prices down gradually, not all at once.<blockquote>我们需要逐步降低股价，而不是一下子全部降低。</blockquote> Interest Rates And Stock Prices<blockquote>利率和股票价格</blockquote> The only way that I can see to do that is through educational efforts. I was dismayed a few months ago to see an article written by Robert Shiller that argued that, given today's low interest rates, today's stock prices are not quite as absurd as they might appear to be when only theCAPE value&nbsp;is considered. The claim is accurate. Low interest rates pressure people not to sell their stocks. So there is a correlation between low interest rates and high stock prices. But a lowering of interest rates is a desperate way to keep stock prices up. I view the lowering of interest rates as a long-term negative for the stock market because there will be a time when prices will fall anyway and a lowering of interest rates will not then be available as an option for stabilizing the market.<blockquote>我认为唯一的方法是通过教育努力。几个月前，我很沮丧地看到罗伯特·希勒(Robert Shiller)写的一篇文章，该文章认为，鉴于当今的低利率，今天的股价并不像仅考虑CAPE价值时看起来那么荒谬。这种说法是准确的。低利率迫使人们不要出售股票。所以低利率和高股价之间存在相关性。但降低利率是保持股价上涨的绝望方式。我认为降低利率对股市来说是一个长期负面影响，因为总有一天价格会下跌，而降低利率将无法作为稳定市场的选择。</blockquote> I believe that the high stock prices that applied at the last time&nbsp;interest rates&nbsp;were lowered should have been taken into consideration as a reason not to lower them. Had interest rates not been lowered, we might well have seen a significant drop in stock prices by now. That would have diminished the odds that we will see a more dramatic price drop at some future date. Which would be good news all around.<blockquote>我认为，上次降息时股价较高，应该被视为不降息的理由。如果利率没有降低，我们现在很可能已经看到股价大幅下跌。这将减少我们在未来某个日期看到更大幅度价格下跌的可能性。这对所有人来说都是个好消息。</blockquote> Perhaps the members of the Fed did indeed take that possibility into consideration when they discussed whether to take actions to lower interest rates. But, if they did, it was not widely perceived that that is what they were doing. For such actions to have their desired effect, investors need to know both that such actions are being taken and why they are being taken. It is sound public policy to keep stock prices from getting out of hand. But most investors do not see things that way today. High stock prices are viewed as good and low stock prices are viewed as bad.<blockquote>也许美联储成员在讨论是否采取行动降低利率时确实考虑到了这种可能性。但是，如果他们这样做了，人们并没有普遍认为这就是他们正在做的事情。为了使此类行动产生预期效果，投资者需要知道正在采取此类行动以及采取此类行动的原因。防止股票价格失控是合理的公共政策。但如今大多数投资者并不这么看。股价高被认为是好的，股价低被认为是坏的。</blockquote> It's big price drops that are bad. Big price drops are caused by high stock prices. So we all should view high stock prices as bad. Policymakers feel a lot of pressure not to let today's high stock prices collapse. Their job is to walk a narrow line. They should do everything they can to prevent a devastating crash. The most important thing they can do to achieve that goal is to encourage a gradual drop in prices that takes us to a place where stock prices are at least no longer entirely insane.<blockquote>价格大幅下跌才是坏事。价格大幅下跌是由高股价引起的。因此，我们都应该将高股价视为坏事。政策制定者感到很大的压力，不能让今天的高股价崩溃。他们的工作是小心翼翼。他们应该尽一切努力防止毁灭性的崩溃。为了实现这一目标，他们能做的最重要的事情是鼓励价格逐渐下跌，将我们带到一个股价至少不再完全疯狂的地方。</blockquote>\n<div class=\"bt-text\">\n\n\n 来源：<a href=\"https://seekingalpha.com/article/4472668-is-it-good-public-policy-to-prop-up-the-stock-market\">seekingalpha</a>\n为提升您的阅读体验，我们对本页面进行了排版优化\n\n\n</div>\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{".SPX":"S&P 500 Index"},"source_url":"https://seekingalpha.com/article/4472668-is-it-good-public-policy-to-prop-up-the-stock-market","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1194422030","content_text":"Summary\n\nShould policymakers prop up the stock market when it appears to be in danger of crashing down?\nPresident Biden has a number of reasons for wanting to keep inflation in check.\nThe market should be permitted to price stocks properly, which it cannot do if policymakers knowingly promote policies that they believe will keep stock prices up.\n\nOriginal Post\nBy Rob Bennett\nShould policymakers prop up the stock market when it appears to be in danger of crashing down?\nThis comes up in regard to theFederal Reserve all the time. Even Buy-and-Holders get anxious about the stock market when prices reach insanely high levels. But a lowering of interest rates can cause people who don't want to remain in the stock market to remain in the stock market on grounds that the low returns available on safe asset classes are flat-out unacceptable. Price crashes do lots of economic damage. So an argument can be made that, when members of the Federal Reserve see evidence that stock prices are about to crash, they should do something to prevent that from happening.\nOther policymakers face similar pressures. President Biden has a number of reasons for wanting to keep inflation in check. So he could promote anti-inflation measures without even taking into consideration their effect on stock prices. But it is unlikely that that effect would not at least be mentioned when Biden's advisers were meeting to determine which measures to advance. Stock price crashes are widely viewed as a negative. So a policy that keeps stock prices up while also combating inflation is generally perceived as better than a policy that only combats inflation.\nPolicymakers Should Not Prop Up The Stock Market\nI generally do not go along with this widespread view. The market should be permitted to price stocks properly, which it cannot do if policymakers knowingly promote policies that they believe will keep stock prices up. So, no, policymakers should not prop up the stock market. If anything, at a time when prices are above fair-value levels, policymakers should promote policies that will bring stock prices down to levels closer to their fair value. I can not recall ever hearing a policy advocated on grounds that it will bring stock prices down. I think that's unfortunate. We should all want stocks to be priced properly. When prices are too high, we should all at least generally favor policies aimed at bringing them down.\nBut…\nIt's not quite that simple.\nToday's CAPE level is 39. The fair-value CAPE level is 17. A government policy that caused stock prices to fall to fair-value levels would wipe out more than half of the value of the stock market. That would cause a dramatic contraction of our economic system. Hundreds of thousands of businesses would go under. Millions of workers would be thrown out of work. Political frictions would be exacerbated. I would love to see a CAPE value of 17. But not that way. If a genie gave me one wish, I would not wish for stock valuations to drop to fair-value levels.\nAt least not in a rush.\nI would indeed like to see stocks priced properly. There are all sorts of benefits that would flow from that. But how we get there matters. If someone learns when she is going 70 miles per hour on the highway that her brakes have failed, she desperately wants the car to stop so that she can get out of it. But there's a big difference between stopping the car by crashing into something and letting it slow gradually to a stop by not applying any more pressure to the accelerator.\nWe need to bring stock prices down gradually, not all at once.\nInterest Rates And Stock Prices\nThe only way that I can see to do that is through educational efforts. I was dismayed a few months ago to see an article written by Robert Shiller that argued that, given today's low interest rates, today's stock prices are not quite as absurd as they might appear to be when only theCAPE value is considered. The claim is accurate. Low interest rates pressure people not to sell their stocks. So there is a correlation between low interest rates and high stock prices. But a lowering of interest rates is a desperate way to keep stock prices up. I view the lowering of interest rates as a long-term negative for the stock market because there will be a time when prices will fall anyway and a lowering of interest rates will not then be available as an option for stabilizing the market.\nI believe that the high stock prices that applied at the last time interest rates were lowered should have been taken into consideration as a reason not to lower them. Had interest rates not been lowered, we might well have seen a significant drop in stock prices by now. That would have diminished the odds that we will see a more dramatic price drop at some future date. Which would be good news all around.\nPerhaps the members of the Fed did indeed take that possibility into consideration when they discussed whether to take actions to lower interest rates. But, if they did, it was not widely perceived that that is what they were doing. For such actions to have their desired effect, investors need to know both that such actions are being taken and why they are being taken. It is sound public policy to keep stock prices from getting out of hand. But most investors do not see things that way today. High stock prices are viewed as good and low stock prices are viewed as bad.\nIt's big price drops that are bad. Big price drops are caused by high stock prices. So we all should view high stock prices as bad. Policymakers feel a lot of pressure not to let today's high stock prices collapse. Their job is to walk a narrow line. They should do everything they can to prevent a devastating crash. The most important thing they can do to achieve that goal is to encourage a gradual drop in prices that takes us to a place where stock prices are at least no longer entirely insane.","news_type":1,"symbols_score_info":{".SPX":0.9}},"isVote":1,"tweetType":1,"viewCount":520,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":[],"verified":2,"subType":0,"readableState":1,"langContent":"CN","currentLanguage":"CN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"andRepostAutoSelectedFlag":false,"upFlag":false,"length":2,"xxTargetLangEnum":"ZH_CN"},"commentList":[],"isCommentEnd":true,"isTiger":false,"isWeiXinMini":false,"url":"/m/post/603060686"}