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Low Demand - Fed

 
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PostPosted: Sat Jan 16, 2016 9:04 am    Post subject: Low Demand - Fed Reply with quote

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Lower income Americans spend and higher income Americans save. The Fed has been trying to get all Americans to spend more and save less.

However, it seems, lower income Americans canít spend much more and higher income Americans wonít spend much more.

So, accommodative monetary policy has been less effective and the rich get richer.

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We can thank the Fed for lower interest rates and higher asset prices to induce spending and borrowing, and reduce saving, a lower cost of capital to spur production, refinancing at lower rates to increase discretionary income, lower mortgage rates to make buying a home more affordable, 401(k)s and IRAs increasing in value, etc.. The Fed has created massive multiplier effects throughout the economy. Yet, the country is still in a depression with anemic growth.

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