Wall Street desperately wants the stock market to go back to the good ol’ days. You know, like during the pandemic, when interest rates were at zero, the government was mailing checks everywhere, and it seemed everyone had so much real money, they were using it to buy fake money. In that environment, any idiot — or anyone on Wall Street — could buy almost any asset, sit back, and watch its value increase. Stocks didn’t just go up, they soared.
Wall Street has even concocted a fairly convincing story for how the market will get back to this state: The Federal Reserve’s rapid interest-rate hikes will cause the financial system to seize up, they will blow holes in the real-estate sector, and layoffs — which have already hit industries like tech and media pretty hard — will spread across the economy. This will, in turn, usher in a recession that forces the Fed to reverse course and cut rates to juice the economy again. After a few months of turmoil, the market will settle back into the low-interest-rate environment that defined the pre-pandemic decade and stocks will be on cruise control once more. A return to normalcy.
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