The Market Ticker
Commentary on The Capital Markets- Category [Federal Reserve]

From the you ought to be arrested file we have this:

When I was chairman, more than one legislator accused me and my colleagues on the Fed’s policy-setting Federal Open Market Committee of “throwing seniors under the bus” (to use the words of one senator) by keeping interest rates low. The legislators were concerned about retirees living off their savings and able to obtain only very low rates of return on those savings … But if the goal was for retirees to enjoy sustainably higher real returns, then the Fed’s raising interest rates prematurely would have been exactly the wrong thing to do. In the weak (but recovering) economy of the past few years, all indications are that the equilibrium real interest rate has been exceptionally low, probably negative. A premature increase in interest rates engineered by the Fed would therefore have likely led after a short time to an economic slowdown and, consequently, lower returns on capital investments. The slowing economy in turn would have forced the Fed to capitulate and reduce market interest rates again.

Uh huh.

Economics 101 -- when there is more of something (supply) compared against demand the price (interest) goes down.  When there is less the price goes up.

So what happens when the Federal Government emits a lot of "moneyness" (credit) into the economy by running deficits?  The equilibrium interest rate goes down.

And what happens when that same government and The Fed enable this behavior through the Primary Dealer system along with ignoring the fraudulent lending that is going on in the private sector?  The equilibrium interest rate goes down further!

This is, of course, ignored -- that is, the cause of the problem.  Bernanke refuses to discuss this (although he knows damn well that it's true) because to do so he must take responsibility for his willful and intentional refusal to deal with either of these factors in the run-up to 2008, and what's worse he then doubled down on that bad behavior by rescuing those who engaged in it during the crash!

The result has been a literal orgy of said bad behavior -- government credit alone has more than doubled in the interim and all of that "moneyness" has gone chasing "things" -- with much of it winding up in stock prices.

The problem is that the devaluation of the monetary system created in the halls of both Congress and Wall Street winds up doing severe damage to everyone other than those who own most of those financial assets -- that is, the common American.  Only the top 1% have seen a "net benefit"; everyone else has gotten screwed in the ass.

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