David Einhorn points out some of the serious negatives to the Federal Reserve’s low interest rate policy, particularly highlighting the negative impact that it has on savers. While I agree with Einhorn’s sentiments, I truly believe that the reason the Fed has had to be so loose with monetary policy is because it has had to combat both the “Great Recession” and a fiscal policy that has been disastrous on too many levels to counts. Low interest rates help provide liquidity, but what is needed is job creation and confidence that policymakers are doing everything in their power to help the economy grow. Instead what we have had is political quagmire where nothing has gotten done to truly promote long term job growth, and politicians that have so little respect for the people that they are representing, that they were actually willing to play chicken on approving a budget extension to keep the government afloat last year. I’ve long thought that it would have been very helpful to provide a tax break on the purchase of existing homes to reduce inventory where it counts, getting to the root of the problems which is the housing market. I don’t even have time to touch on the disastrous regulators that have increased capital requirements to an excess at the worst time possible further exasperating the poor economic conditions. Below is the article for you to enjoy:
http://www.huffingtonpost.com/david-einhorn/fed-interest-rates_b_1472509.html