Black Monday, 1987, The Birth of Big Time Moral Hazard in the Market
(From Global Macro Monitor)
Some argue, including one of the regular authors on this website, the Fed’s response to Black Monday ushered in a new era of faux investor confidence and the moral hazard that the central bank will always backstop falling markets. Thus, forever distorting market risk and real price discovery and contributing to the current boom-bust asset market cycle the global economy now experiences and will be extremely difficult to reverse.
This article was originally posted here: https://www.ac2news.com/2020/10/black-monday-1987-the-birth-of-big-time-moral-hazard-in-the-market/.