The Fed has never been able to stand on its record. From Charles Hugh Smith at oftwominds.com:
The mainstream holds the Fed is busy planning a return to the glory days of zero interest rates, but ZIRP is on the downside of the S-Curve; it’s done, gone, history.
Let’s summarize what the Federal Reserve accomplished since embarking on its massive interventions to control volatility, risk, bond yields, interest rates, the mortgage market, bank subsidies and liquidity, all of which can be summed up as the cost of credit-capital, that is, capital that is borrowed into existence based on some form of collateral or income stream.
By artificially suppressing the cost of capital to less than inflation, the Fed succeeded in:
1. Fatally distorting the economy.
2. Greatly enriching the already-rich at the expense of the bottom 90%.
3. Crushing the middle class and reducing the bottom 90% to debt-serfs.
Let’s consider how the Fed fatally distorted the economy by suppressing the cost of capital to less than inflation. Recall that the Fed crammed ZIRP–zero interest rate policy–down the throat of the economy from 2009 to 2020, while official inflation ate up 22% of the purchasing power of the dollar. Inflation was never 0%, so the cost of capital for corporations and financiers was actually negative, i.e. less than inflation.
