Seems like good reasoning here with one exception. you treat the market as an intelligent singleton. the market (collectively) takes an action that forces FED actions.

I don't think this is right. Each INDIVIDUAL in the market it reacting to their own person interests, they are NOT saying, ``oh if it were only up to me, I would choose path A, but since I know that if we ALL choose path B, then the FED will react in a beneficial way, so I will choose B.''

No, individuals are only considering their own interests (both short and long) then acting on that. Individuals can "game" the FED on an individual basis. They can reason that the FED will bail me out, there fore I will choose this risky path which is collectively acting against the FED. But notice they did NOT choose that path IN ORDER to CAUSE FED action. Rather they chose that path because they already understand and anticipate FED thinking.

it is a small but important distinction. we should think of the market as a unified intelligence. its not.