12/04/2015 - The Unintended Consequences Of Central Bank Policies
Mises Institute posted essay refers to the recent letter to the Federal Reserve from the “savers of America” written by Ralph Nader .. the letter emphasizes how savers & retirees have been shafted by very low interest rates on bank accounts & fixed income investments .. it’s financial repression .. it’s the result of the unintended consequences of central bank & government policies & financial reform/regulations .. the essay makes a few great points to counter those seeing the “positive” short-term boom aspects of central bank money printing: “If Yellen is asserting that things are more affordable because it’s easier to borrow cheap money, then she’s just ignoring the trade-offs involved. Low interest rates and inflation mean that people must borrow more because it’s far more difficult to save under those conditions. Yes, debt is cheaper, but people must also take on more debt because it’s so difficult to save or make money off investments unless you’re not already rich. And, of course, this just applies to people who are at a stage of their life where it makes sense to take on more debt. If you’re old or on a fixed income, all you’re getting from the Fed is a huge ‘screw you.’ Moreover, when it comes to affordability of everyday, things, who is Yellen kidding? Home price growth and rent growth are at historic highs. Are we to believe that immense growth in rents and mortgage payments (the largest single expense for families) are a good thing for families? For people who already own homes, rising home prices are often a hurdle that can be overcome. But for people who don’t already own real estate, there’s little hope of buying one under these conditions. Surely, the Fed has played no small part in driving the homeownership rate in America down to a 30-year low. And again, if you’re retired: good luck. You’re gonna need it. Yellen no doubt believes that wages are higher because of Fed intervention. But in a world of sky-high rents, real wages are in fact lower.”
LINK HERE to thehttp://www.cliffkule.com/2015/11/the-federal-reserves-stimulus-hurts.html Article
