A free market is a market economy system in which the prices for goods and services are set freely by consent between vendors and consumers, in which the laws and forces of supply and demand are free from any intervention by a government. While the stock market was a free market system, since the Great Recession, the central bankers (Fed, ECB and BoJ) have completely changed the rules of the game. With quantitative easing in the US, the Fed purchased trillions in mortgage backed securities and US Treasuries to keep rates low and to keep liquidity especially high. The Bank of Japan went even further. Since 2011, the BoJ has been buying exchange-traded funds or ETFs to push its stock market higher. While this may seem very extreme, I was shocked to find out that the Japanese central bank owns more than half of the nation's market for ETFs! That's not a typo. At the end of September, the BOJ has accumulated an ETF position of 52% of the entire ETF market!
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