The Fed is causing serious long term distortions in the economy by artificially holding down interest rates for a prolonged period. Its resulted in a lot of malinvestment and misallocation of resources. We’re going to pay a big price for this economicmanipulation eventually.
Re the interest rates, seniors have been bombed by this for almost 10 years now as their savings are being eroded by inflation while their interest rates are near zero. It is a big contributor in the drop in family incomes. In effect, as the low interest rates force individuals to seek higher ROIs, it has resulted in a false support for equities and home prices IMO.
Trump said the other day the FED cannot allow interest rates to climb much (until he is elected of course) because the result will be monumental deficits and a steep drop in the markets along with home prices. IOW, the financial side of what has been a glossed over industrial recession. Once the spiral begins, it may be unstoppable, again IMO.
I wonder. Interest rates are determined by the intersection of the LM Curve (monetary policy) and IS Curve (fiscal policy). Right now, it seems to me that we are in what both Keynes and Friedman called the Liquidity Trap. If true, monetary policy is pretty much ineffective and you need fiscal measures to pull us out, which essential boils down to two broad policy measures: 1) increase spending, or 2) lower taxes. Since our elected political hacks use our tax money to buy votes, they opt for measure #1. Lets try #2 for a while and see if that ends Obozo's 7 years dismal economic record.
I fully expect Obozo to pull something in January like having the Fed suddenly raise interest rates by a huge amount or some such shenanigans to poison the economy completely if Trump wins.
How do you know they're holding them down?
What would/should they be? How do you know?