27 August 2015

ZIRPageddon.

At the end of the day, ZIRP is really not even a monetary policy. In fact, it constitutes a giant, capricious transfer of income and wealth by an agency of the state
to borrowers and gamblers at the expense of savers and producers
.

Indeed, not a net dime of the massive $3.5 trillion of new liabilities created on the Fed’s balance sheet during that period ever escaped the canyons of Wall [Street].

* * * *

The truth is, the Fed’s endless blathering about its 2% inflation target is a colossal hoax. In the first place there is no evidence whatsoever that real output and wealth increase faster at 2.0% inflation than they do at 1.0%—-or at any inflation rate at all. In fact [notwithstanding?], the Fed’s claim that it is still well shy of achieving its inflation target is the overriding reason why it keeps shoving zero cost credit into the money market.

[Big snip discussing BLS fictitious construct called Owner’s Equivalent Rent (OER) to represent housing costs and showing that if "honest commercial data" are factored into the standard BLS "medicated" consumer price index a different inflation rate is evident.]

In short, it’s kind of hard to say that 45% inflation in 15 years is not enough. Yet the official CPI adjusted for an accurate housing inflation rate computes to 2.5% per annum.

* * * *

In truth, all of the Fed’s gumming about the so-called inflation shortfall is just ritual incantation. The real reason it doesn’t raise rates is that it fears that the first rate increase in nearly a decade will trigger a Wall Street hissy fit.
"Can Kickers United—–Why It’s Getting Downright Hazardous Out There." By David Stockman, 8/25/15.

Photo credits: The Smarter Wallet; Inbound Sales Network; Ghana Witch Doctor.

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