The Fed’s massive money printing campaigns flood the canyons of Wall Street with ZERO-COGS. That is, our rogue central bank enables speculators and gamblers to amass huge asset positions while paying virtually nothing for the short-term borrowings used to carry them. Its like making cars with zero-cost steel, tires, batteries, electronics and paints. (See “Yellenomics: The Folly of Free Money”)
This rigged equation is supposed to produce “wealth effects” and thereby trick the masses into spending more today on the theory that they can live off fattened IRA-stock accounts tomorrow. Alas, after three devastating bubble collapses this century—dotcom, housing, and the 2008-09 stock bust—-the unwashed aren’t taking the Fed’s bait.
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1 comment:
A friend of mine in real estate in one of the areas mentioned has told me the same thing Stockman says here.
Long read, but true, very true.
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