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It's so sad to see people blame one of the few parts of government still managed by competent people. Blaming the Federal Reserve for things like inflation or w

by Aunche 5y ago

It's so sad to see people blame one of the few parts of government still managed by competent people. Blaming the Federal Reserve for things like inflation or wealth inequality is like blaming a cardiac surgeon on side effects of a triple bypass operation. The fault doesn't lie on the expert who needs to resort to increasingly aggressive interventions to maintain some semblance of stability. It lies on the patient to can't help but endlessly gobble pork. The real "money printing" occurs when Congress decides to fund trillions in spending on debt. The Fed flipping a switch to convert that debt into digital dollars is just something their job obligates them to do. Unlike the government, the private sector can't decide to borrow as much as it likes without impunity. With the government swallowing up a large fraction of the liquidity, in a world without QE, interest rates would skyrocket and the private sector would fall into a downward spiral and we would head straight to another Great Depression.

ardme 5y ago
Well isn't the issue here that The Fed enables the reckless behavior of congress by sterilizing the deficits? Yes the root cause is the politicians spending tons of money to get re-elected and running up deficits but they shouldn't be able to get away with it and keep kicking the can down the road. To your last point - of course it's obvious that interest rates are suppressed and if they were allowed to rise it would cause a depression. But if they were not there would be less mal-investment and the zombie companies propped up by debt would soon collapse. It's not that this wouldn't cause pain in the short term but that you can't just eliminate reality and it's going to happen sooner or later. The longer you delay the worse the ultimate recession might be.
- Aunche 5y ago
  > Well isn't the issue here that The Fed enables the reckless behavior of congress by sterilizing the deficits? Well doctors enable unhealthy people to live unhealthy lifestyles, but nobody blames them for that. They can't just say, "I won't give you blood thinners until you go on a diet." Yes, politicians ought to face consequences, but that is not up to the Fed. It is up to the voters to demand better candidates rather than point their fingers at the Fed. > It's not that this wouldn't cause pain in the short term but that you can't just eliminate reality and it's going to happen sooner or later. It worked out during the Great Depression because all of our rival powers were completely destroyed by WWII. We won't be so lucky this time. China is poised to overtake the US as the top superpower if our economy collapses. In a couple decades, this might not be the case, as they will be facing severe demographic problems.
  - ardme 5y ago
    > It worked out during the Great Depression because all of our rival powers were completely destroyed by WWII. We won't be so lucky this time. China is poised to overtake the US as the top superpower if our economy collapses. In a couple decades, this might not be the case, as they will be facing severe demographic problems. Pretty much, yep
analyte123 5y ago
Read the article! This is discussed in detail, in addition to the effects of USD being a global reserve currency. Most of the commenters here appear to have not read the article.
- Aunche 5y ago
  I did skim through the article, and don't have any complaints about it. I'm mainly referring to the survey results where 2/3 of her audience believe that the Fed is the primary cause of wealth inequality. The article does refute this, but you shouldn't be blaming this on monetary policy in the first place.

by Aunche 5y ago

ardme 5y ago

Well isn't the issue here that The Fed enables the reckless behavior of congress by sterilizing the deficits? Yes the root cause is the politicians spending tons of money to get re-elected and running up deficits but they shouldn't be able to get away with it and keep kicking the can down the road. To your last point - of course it's obvious that interest rates are suppressed and if they were allowed to rise it would cause a depression. But if they were not there would be less mal-investment and the zombie companies propped up by debt would soon collapse. It's not that this wouldn't cause pain in the short term but that you can't just eliminate reality and it's going to happen sooner or later. The longer you delay the worse the ultimate recession might be.

Aunche 5y ago
> Well isn't the issue here that The Fed enables the reckless behavior of congress by sterilizing the deficits? Well doctors enable unhealthy people to live unhealthy lifestyles, but nobody blames them for that. They can't just say, "I won't give you blood thinners until you go on a diet." Yes, politicians ought to face consequences, but that is not up to the Fed. It is up to the voters to demand better candidates rather than point their fingers at the Fed. > It's not that this wouldn't cause pain in the short term but that you can't just eliminate reality and it's going to happen sooner or later. It worked out during the Great Depression because all of our rival powers were completely destroyed by WWII. We won't be so lucky this time. China is poised to overtake the US as the top superpower if our economy collapses. In a couple decades, this might not be the case, as they will be facing severe demographic problems.
- ardme 5y ago
  > It worked out during the Great Depression because all of our rival powers were completely destroyed by WWII. We won't be so lucky this time. China is poised to overtake the US as the top superpower if our economy collapses. In a couple decades, this might not be the case, as they will be facing severe demographic problems. Pretty much, yep

analyte123 5y ago

Read the article! This is discussed in detail, in addition to the effects of USD being a global reserve currency. Most of the commenters here appear to have not read the article.

Aunche 5y ago
I did skim through the article, and don't have any complaints about it. I'm mainly referring to the survey results where 2/3 of her audience believe that the Fed is the primary cause of wealth inequality. The article does refute this, but you shouldn't be blaming this on monetary policy in the first place.