Former US Treasury Secretary Says Stocks Have to Trade on Real Economics

Former Treasury Secretary Hank Paulson said Wednesday that stocks and other assets need to start to trade again on “real economics,” arguing the Federal Reserve should hike interest rates sooner rather than later.

“This has been monetary policy that has worked the way it was supposed to work,” he told CNBC’s “Squawk Box” in an interview. “When you solve a big ugly problem, you are never going to have a perfect elegant solution.”
He acknowledged the “disortational effects” of the Fed’s easy money policies, which have benefited investors by pumping up assets, while hurting savers and Americans on fixed incomes.

“I have more of a concern about asset bubbles,” he said. “It’s very hard to know when you have these misallocations, which assets are mispriced.”

It seems investors are addicted to these near-zero-percent rates, he said. But overall, he continued, “this has been monetary policy that has worked the way it was supposed to work.”

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza