With the announcement by the Federal Reserve that it is raising its interest rate by 25 basis points, a policy of virtual zero-interest rates maintained by America’s central bank–and imitated by other central banks worldwide since the global economic and financial crises that arose in 2008–has officially come to an end. The minor rate increase of 0.25 percent is the first time since 2006 that the Fed has upped its benchmark interest rate.
The end of the extraordinary and long-lasting monetary easing aggressively maintained by the Fed for nine-years thus comes to an end, the justification being that the policy “worked,” the evidence being a very minor rise on forecasted future GDP growth prospects for the American economy. The decision by the Fed to raise its interest rate has supposedly been priced in by the equity markets for probably the last two years, at least. Nevertheless, the continued weakness in the global economy may provide a lesson in how fragile it really is, once the monetary pump-priming of zero-interest rates is gone.
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After a decade and a half of very low interests rates–and virtually zero interest rates since the onset of the global economic crisis in 2008, the U.S. Federal Reserve is increasing the rhetoric regarding what everyone knows is inevitable: rate increases. The most recent comments by the Fed chair, Janet Yellen, point in that direction.
Yellen couched her words carefully, hinting that the rate increases will be slow and gradual, occurring in small increments over a period of several years. But the message is clear; monetary chicanery has run its course as an economic palliative. The distortions in the economy created by artificially low interest rates cannot be sustained forever. The problem is, what bullets will be left to policymakers when the next recession strikes?
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CLICK ON IMAGE TO VIEW VIDEO
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Hillary Clinton Nude
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Those who regularly read my blog, either on the GlobalEconomciCrisis.com website or my blogs pieces that are published in the Huffington Post, know that to say I am a critique of Ben Bernanke and his loose monetary policies at the U.S. Federal Reserve is an understatement. Though most mainstream economists believe that Bernanke is a hero of the global economic crisis, a supposed savior from liquidity doom, there are a few excellent economists who from time to time offer incisive critiques on the Fed’s policies under Ben Bernanke.
Recently, I read an outstanding opinion piece on the madness of Ben Bernanke’s policies, and why it is bad for other countries, including his own, to march in lock-step with the Fed’s easy money policies. Dr. Yishai Ashlag, an economist who writes for Israel’s leading business publication, “Globes,” has a piece entitled, “Interest rates should be raised not cut.” According to Ashlag’s take on Ben Bernanke, “his policies are bad for the U.S. and bad for the world.” His explanation is well worth reading; here is the link to Dr. Ashlag’s piece on the “Globes” website:
http://www.globes.co.il/serveen/globes/docview.asp?did=1000880933&fid=4111
If Hillary Clinton runs for President of the United States in 2016, see the video about the book that warned back in 2008 what a second Clinton presidency would mean for the USA:
HILLARY CLINTON NUDE
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