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> That means we have massive amounts of capital available to invest in new endeavors. It explains why interest rates are low and there is fairly little that cen
by mifreewil 11y ago
> That means we have massive amounts of capital available to invest in new endeavors. It explains why interest rates are low and there is fairly little that central banks can do about it unless they figure out a way to dramatically reduce investable capital – they can certainly shorten their balance sheets but even that impact is likely to relatively small in the overall scheme of things (eg US Fed about $3 Trillion).
I'll never understand this line of reasoning. It's completely backwards. Does anyone really think it'd be so easy to borrow money for consumer goods with suspect credit or outlandish business ideas without central banks pumping liquidity into the economy? Anyone looked into savings rates lately? You know, where natural capital formation occurs?
- mdemare 11y agoJust imagine what would have happened if the Fed would have used their current strategy in 1995, or 2005. The same as what's happening now? Sure, then blame the Fed. Something dramatically different? Then maybe there's something else going on, and the Fed is merely responding to that.
- mifreewil 11y agoHow the Fed interacts with the economy, I don't think is too different from any other speculator in the market. They just look at different charts, have more degrees, and have greater propensity for groupthink.