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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