It’s one of those planted stories that you have to get used to when you live in a planned economy. Which we do. Our pretenses to “capitalism” notwithstanding.
The Chairman of the St. Louis Fed comes out with a prediction that interest rates will begin to rise early next year, much sooner than anyone else at the Fed has been predicting.
I don’t see how this is possible without destroying the banking system, because the banking system is already holding, as “assets”, so much low interest debt – mostly USG bonds – and rising interest rates will virtually wipe out the value of those assets.
Yet the perpetually low interest rate environment has unarguably depressed the economy, sort of the opposite of what it’s supposed to do but this is a common feature of modern economics: upside-down results followed by lots of head scratching.
This may all be feigned, of course. It seems to me that the (probably unconscious, or semi-conscious) purpose of the central bank is to prop up the banking system for the benefit of the financial and government sectors, even if it does depress the real economy.
So, you know, Japan.
At the same time, one wonders if the Fed might just be able to pull it off. We are, after all, in uncharted territory. Japan doesn’t have the “world’s reserve currency” or, say, the world’s greatest nuclear arsenal.
I’m open to other ideas on all this. Don’t seem to be many out there, though.