This is too good not to share. I heard someone I do respect- hence will remain nameless- state the following.
"The Fed is not manipulating prices, it is just giving away free money."
Wait, what. Doesn't that statement imply the violation of all sorts of economic rules. Money that is created or interest rates that are manipulated lower than the market rate will lead to purchases and capital decisions that would otherwise not be made, thus either creating false demand or pulling demand that would have otherwise develop in the future. The distortion of demand HAS to manipulate and distort the signals imbedded in prices, just as a function the supply/demand curve intersection. The statement essentially highlights everything that is wrong with the Fed trying manipulate the economy.
"The Fed is not manipulating prices, it is just giving away free money."
Wait, what. Doesn't that statement imply the violation of all sorts of economic rules. Money that is created or interest rates that are manipulated lower than the market rate will lead to purchases and capital decisions that would otherwise not be made, thus either creating false demand or pulling demand that would have otherwise develop in the future. The distortion of demand HAS to manipulate and distort the signals imbedded in prices, just as a function the supply/demand curve intersection. The statement essentially highlights everything that is wrong with the Fed trying manipulate the economy.
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