Economics professor warns ‘we definitely have a bubble in the stock market'

Core Viewpoint - The Federal Reserve is shifting towards easier monetary policy due to political pressure, which may lead to sustained high prices and inflated asset bubbles [1][3]. Monetary Policy Changes - The Federal Reserve has halted quantitative tightening and is expanding its balance sheet, planning to purchase $40 billion in Treasury bills, indicating a move towards monetizing the deficit [3]. - The consumer price index (CPI) remains at 2.7%, above the Fed's target of 2%, suggesting that inflation is not being effectively controlled [2][3]. Inflation and Asset Bubbles - Monetizing government debt is expected to increase the money supply, leading to higher inflation and asset bubbles, particularly in commodities and the stock market [4][3]. - Predictions indicate that looser monetary conditions will continue to drive up prices of hard assets, with gold, silver, platinum, and copper reaching record highs [7]. Banking Sector Implications - Upcoming regulatory changes will enhance commercial banks' lending capacity, allowing for greater credit expansion and accelerating money growth [5]. Political Influence - The shift in monetary policy is perceived as being influenced by the Trump administration, with expectations that this loosening will persist [6].