I can understand relatively easy money of 3% in the 90s built the .com bubble, easy money of something like 1.5% in 2002 built the housing bubble. Now we're at 0% - where is it going? I suspect it's going to prop up the housing bubble. Can you point me to a current affairs analysis of present conditions?
Thanks
It's propping up the government bubble.
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Stranger: It's propping up the government bubble.
As in the industries which are hiring too many people and expanding production too much and will be unable to pay back its debt is.. government. This would suggest that this time it's different, inflation will be bad, the fed no longer has the interest rate tool, but those "industries" being government and close to government can simply continue bailouts until there is no private sector left.. wow.
?
Please forgive my ignorance, but which interest rate are you talking about and what is your resource? Since you mentioned easy money I am guessing this to be the federal funds rate? Just from a preliminary point of view. Inflation has risen quite a lot the past three years, but inflation has been destroying savings, and investment for a long time. My guess is this policy will lead to more bad loans, and bad investment. When more folks realize what is happening to their monetary unit, it may appear as if consumer sales are trending upward. It may be that people will simply try to find as many ways as they can to hedge against inflation.
I believe politicians would sooner see the economic collapse of the dollar, than to venture into the only practical solution to inflation(i.e. hard money). Since taxes are already outrageous, the only way to spend like crazy is to lower the purchasing power of the dollar through inflation.
The policy of easy money, and easy credit, leads to heavy malinvestment, and a lowering of the living standard of wage earners.
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