Howard Marks

If the Fed puts money artificially cheap, then it induces behavior like risk taking.

It forces people into riskier activities because the returns on safe activities are so low.

It tends to reinforce the view that there's a Fed put, that if there's a problem, the Fed will solve it, and that contributes to risky behavior.

These are all bad things.

And, you know, I believe that the Fed should be passive most of the time and only come to the rescue if the market is – if the economy is seriously overheated and tending towards hyperinflation or seriously under –

active and not creating jobs.

I don't think that's the case right now.

And you can see in the divided open market committee that there's a difference of opinion.

So I don't think that action on the part of the Fed is compelling right now.

And there are people who think that rates should be a lot lower than they are today.

I just don't see the merit in that.

Well, the lower base interest rates are, everything scales off that.

So the Fed funds rate at 3 and 1 half is below history.

These are not high rates.

They're only high relative to the last 15 years.

But this is a low rate.

So everything scales off that.

Most things will give moderate returns.

In the debt area, I think prospective returns are moderate, okay, not lush, but not inadequate.

The trouble is that the S&P, based on its P-E ratio relative to history, appears to be priced to provide