Interest Rate Two-Step

Via Drudge, behind a link questioning whether the Fed is ever going to “raise rates”, it appears at least that it won’t be any time soon.

We’ve been over this beforeLots of times.  But to recap briefly, the idea – basically by now thoroughly discredited to any reasonably informed and intelligent person – that “low interest rates stimulate the economy” is a self serving mythology of the financial and government class that is sold to the rubes in fly-over country to falsely assure them that what is being done by their representatives is all in their interest (no pun intended).  The truth is that the banking system is protecting itself and its privileged economic position, and all those who have come to rely on that position.  Which is a not insignificant number of people, and not all of them are masters of the universe billionaire types.

The political considerations here are formidable.  That’s why I rarely view this stuff in terms of good and evil.  I think everyone feels trapped, even those who are ostensibly running things.  It’s just not quite fair that they are trapped where they are, and others are trapped into, say, homelessness.

Can they keep rates low for a really, really long time and let banks who would otherwise collapse re-order their balance sheets so that when rates finally rise those banks won’t go under?  It would seem this is the plan.  What is the human cost of it?

I’m going to have to mull that over for a bit.

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