We live in a world where the central bank (Fed) *rigs interest rates low, in order to rig debt levels and asset prices high* as they can possibly go.
I know it’s abstract and I comment on it ad nauseum, but I’m not sure it can be over-stressed. It has lots of bad effects.
- You think homes are unaffordable, compared to (say) 40 years ago? Guess why home prices aren’t a good deal lower. (There are many reasons – but try guessing the biggest.)
- Feel hopeless about your ever retiring? Take a guess why retirement income is hard to come by.
- Feel like you struggle to make ends meet every month, while wealthy people (having lots of financial assets) keep doing better and better? One more guess why.
- Feel like new, good jobs are impossible to come by? The Obama administration (including Obamacare) is a big drag, there. But the Fed doesn’t exactly help.
- Feel like the stock market is a crazy bubble again? Feel like we learned nothing from the 2008 crisis, and our economy is still much too ‘financialized’ and debt-ridden? Again, many causes – but one guess as to the top cause…
Interest rates are the most important price in the economy. They should be set by the People in free markets. I see no reason to have a Politburo which plans them – and plans them badly, in ways that injure society.