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All the Fed can really do is offer cheap credit. If no one wants to take out a loan the Fed runs into the “pushing on a string” problem. They can’t force anyone to borrow money.
A “damaged demand function” sounds like a fancy way of saying that consumers haven’t got any free cash around with which to buy anything. Which isn’t surprising when you take into account soaring Obamacare costs, taxes, wages suppressed by competition from immigrants, and the loss of high paying blue collar jobs.
Never underestimate the effect that endless rules, regulations, a myriad of taxes and an anti carbon energy policy over eight years has on business development and wealth formation. If creative entrepreneurs allowed and encouraged to do what they do best, the role of the Fed would be much different. Interest rates would naturally rise as those entrepreneurs would compete for capital and raise interest rates due to increased demand. The Fed would be worried about “inflation” and an “overheated economy”. Right now all they are doing is the equivalent of monitoring the air conditioning in a funeral parlor.
I have one: go back to the gold-standard.
That immediately makes the fed useless (they can't print gold).
Our economy is hollow.
Imagine what our “natural” economy would look like if you backed out the $10 trillion Obama borrowed and dumped into the economy (or even just the foreign component of that) and the effect of the massive flood of money/credit the Fed has been trying to push out into the economy.
With the foregoing, we have 1% growth. What would it have been on a “natural” basis? In other words, how bad a depression are we REALLY in?
Our best chance is the one Trump is offering, taking back some of our old world economy from the other countries to which it has moved. The ‘free traders’ as the writer suggests are unwilling to acknowledge the connection between our high government expenditures and debt, and private debt, with the loss of old world economy jobs or jobs moving down the value-added ladder.