What do you do as an investor if you have cash sitting in the bank gathering dust, the markets are running, and you see inflation in the outlook?
What do you do if you are a corporate with cash burning a hole in the balance sheet, shareholders demanding a return on investment, and you see inflation in the outlook?
You deploy your cash.
ZIRP forces cash from the sidelines into the market, almost irrespective of the fundamental outlook.
Investors are scarred and highly skeptical of the markets, and are not surprisingly reluctant to leave those sidelines. But many have no option. That cash is slowly but surely getting squeezed back into the markets.
What happens if/when that cash is redeployed and the market fesses up to reality? A potential disaster waiting to happen.
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