LogFAQs > #912614000

Teddytalks posted...

tennisdude818 posted...

A recession will come because the Federal Reserve enabled too much credit growth for way too long. We have another stock market bubble, particularly in tech. When a central bank suppresses interest rates it makes long term projects (i.e. dot coms in the 90s, housing in the 00s) look more attractive than they otherwise would, and investors pile in. Central bank intervention creates the next crash by solving the previous one.

The central bank does an Excellent job, hence why every country have one. Their jobs are to limit the amount of credit a bank can reasonably give out, control interest rates, as you noticed, send notes back if they believe that banks are over lending and generally work to ensure banks are acting in good financial faith. Read a book on it.

I've read plenty on the subject, thanks. Every country has a central bank because governments and big banks like low rates and easy credit. The warfare/welfare state could not exist to the degree that it currently does without artificially low rates, and the financial sector would not be as huge as it is without the Fed. The fact that "every government does X" is not automatically something to be proud of.

Edit: The Fed doesn't have a better chance of knowing what interest rates "should be" anymore than the central planners at the USSR know what the price of steel should be.
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"I have never understood why it is greed to want to keep the money you have earned but not greed to want to take somebody else's money." Thomas Sowell