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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region Forums“A Total Illusion from QE and Financial Engineering”
A Total Illusion from QE and Financial Engineering
by Harry Dent April 22, 2016
The 10-Year Treasury Is Less Than You Think
By Harry Dent, Economy & Markets
When the Fed was created in 1914, it was set to task of controlling short-term interest rates in an attempt to iron out financial cycles. It succeeded for many years. But by avoiding the natural rebalancing (and occasional pain) from free markets, we just got a bigger bubble into 1929. Then, when it finally burst, we got the greatest depression in all of modern history!
Since the Fed and other central banks were created, they have always manipulated short-term interest rates to try to encourage borrowing and spending in slowdowns to make the natural economic cycle go away.
And every time, it suppresses the economic cycles that were already in place, until finally they come roaring back.
So it always strikes me as funny to see highly educated, seemingly reasonable people in pin-striped suits and pantsuits stand in front of us and basically say that theres a free lunch after all that we can get something for nothing!
To them, economics is no longer a matter of supply and demand, free markets and rebalancing. They think weve found a way to program the economy so we never have a recession again.
All the apparent education and sophistication of these top economists, financial officials and central bankers boils down to this simple automaton explanation: if we dont keep taking more of the financial drug that we used to keep the bubble going, like zero interest rates and QE, we will collapse and go into detox. ..................(more)
http://wolfstreet.com/2016/04/22/a-total-illusion-from-qe-and-financial-engineering/
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“A Total Illusion from QE and Financial Engineering” (Original Post)
marmar
Apr 2016
OP
Jim Beard
(2,535 posts)1. V. Low interest rates can be just as damaging as extreme inflation because
the tools of the Fed are frozen in place. They just do not have any tools to control the economy if the ability to raise and lower interest is not available.
Nye Bevan
(25,406 posts)2. Does the author of that article even know that QE ended in October 2014? (nt)