The New York Times (accurately) summarizes the Federal Reserve’s monetary policy:
The Federal Reserve announced two weeks ago that it would extend its own bond-buying program until the end of the year.
The actions once again cast central bankers in the role of primary responders to the global economic malaise, aiming at the same basic goal that they have tried to hit repeatedly over the last six years: encouraging people and businesses to borrow and spend and take greater risks with their investments.
So the Fed creates a housing bubble to replace the dot-com bubble by keeping interest rates artificially low (see my book, Ron Paul vs. Paul Krugman: Austrian vs. Keynesian economics in the financial crisis), an artificial boom created by unsustainable borrowing and spending and excessive risktaking, and now its solution to the recession that caused is to continue to try to keep interest rates artificially low and incentivize even more borrowing and spending and risktaking. And all the politicians and Keynesian economists sit and scratch their chins and wonder why we can’t seem to get out of the financial mess we’re in. “Why isn’t printing money working? It just doesn’t make any sense!”
