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Sunday, January 25, 2015

What Hath The Fed Wrought?

City Journal columnist Nicole Gelinas gives us a brief overview of the Fed’s failure to deal with the economy’s real problem: too much debt, in 2008, and still today.  The implicit assumption underlying Obama administration policies and those of the Fed is that the way to deal with people who have more debt than they can repay is to encourage them to borrow still more money.


Of Interest at the Fed
No one knows what will happen if the central bank raises rates.


The “wealth effect” created by the Keynesian economic policies of former Fed chairman Ben Bernanke succeeded only in booming the stock market, enriching wealthy bankers, hedge fund operators, and speculators.  Retirees and lower-income ranks of workers have been trashed by near-zero interest rate returns on their savings.

The productive economy has labored for nearly eight years under increasing governmental regulatory strangulation and deficit spending financed largely by the Fed’s quantitative easement, government-bond-buying policy.  Recent slow gains in economic activity have been made, despite Obama’s administrative regulatory policies and constant threats of more regulation and higher taxes.  In fact, the biggest engine of economic recovery has been hydrofracking to produce more petroleum and natural gas, which the Obama administration has sought to kill off and replace with government-subsidized efforts to force use of “green” energy.