One of the things about the "winding" which started all this was that it involved bailing out institutions considered too-back-to-fail.

And that bailing out altogether meant that such institutions had the "full faith and credit of the US government", just like what's printed on dollar bills and these institutions could effectively print money more or less like the Fed.

So the Fed itself has said it will start selling it's particular portfolio, with the proviso that it will stop if anything seems to be going wrong. Which is to say that this is "privatizing the bubble" since the too-big-to-fail institutions can effectively "print" any money that leaves via the Fed's action. Obviously, there are micro ways that this will play out, this will change the color and emphasis of the "Greenspan Put" or it's many latter-day equivalents but those are small adjustments, not fundamental shifts - ie, we're still in bubble-nomics, well, unless the Fed really fumbles this.

Essentially the banks made money just for accepting the bailout. See:

http://www.zerohedge.com/news/2017-04-18/free-money-fed-pays...

and

https://www.washingtonpost.com/news/wonk/wp/2015/12/21/why-t...

And as a note, the Fed has stabilized markets very well for the last eight years - at the price of speculative distortions to the real economy.

It's very hard to really know this. We can't experiment, and we are a really long way off from accurately simulating the real world mathematically.

The most academically accepted hardcover on the Great Depression (A Monetary History...) stated the Fed was most responsible for it.

The thing about the Fed is that money represents real goods and services. That's real product of labor that does something useful for someone else. The Fed, at face value, tells us it can pull some levers and create an alchemy where it produces more real value in the economy. That is called magic, or economics, and it doesn't really work. Their actual role is to serve as a nanny state subsidy institution for the big banking empires.

There is the Keynesian argument that the Fed needs to mamage aggregate demand, but there's no way to test if that's really true.

Personally, I'd much rather take a money supply controlled by a k-percent rule, get rid of the Fed, and make all those "smartest guys in the room" working in finance go do something useful instead.

Agreed.

> The Fed, at face value, tells us it can pull some levers and create an alchemy where it produces more real value in the economy.

Strawman. Nobody relevant actually claims that.

What many claimed was that QE would increase lending in the real economy, which would obviously boost the economy (because more real economy lending = more spending = more demand = more economic activity). That hasn't really happened, and I hope economists learned the lesson.

> There is the Keynesian argument that the Fed needs to mamage aggregate demand

That's monetarism, not Keynesianism -- the main message of Keynes is for the government to manage aggregate demand via its fiscal policy and budget. Though I grant you that for whatever reason, there's substantial overlap when it comes to what individuals believe.

> Personally, I'd much rather take a money supply controlled by a k-percent rule, get rid of the Fed, and make all those "smartest guys in the room" working in finance go do something useful instead.

The funny part about statements like this is that the money supply that matters for the real economy is managed by commercial banks anyway.

And you do need an institution that acts as a firewall to prevent temporary liquidity issues from turning into full insolvencies via self-fulfilling prophecy (aka bank runs). That institution happens to be the Fed in the US. You can argue about the more political, monetary policy side of things, but having that firewall is really, really critical.

Totally agree on the "doing something useful instead" part, though :)

I don't know that they have learned that lesson ..

My understanding is that the failure of institutional lending in response to QE is still considered "a mystery" by mainstream economists, etc.

I personally think that banks are in the same position Apple is in with their x00 Billion dollars hoarded overseas ... they are terrified that the system could come flying apart at any moment and are therefore sitting on cash or reserve assets to protect against this.

As the Austrian school economists pointed out during the crisis, you can print money, but you can't print borrowers - the banks need qualified borrowers to lend to, and in the middle of a financial crisis there aren't as many.

Of course the fed can't allow cascading bank failures, but once the banking system is out of danger pouring in more money won't do much.

>That's monetarism, not Keynesianism -- the main message of Keynes is for the government to manage aggregate demand via its fiscal policy and budget. Though I grant you that for whatever reason, there's substantial overlap when it comes to what individuals believe.

You are right to say that Keynesians and Keynes himself emphasized fiscal policy, but afaik the traditional monetarist view is actually not to engage in discretionary monetary policy at all. Managing AD was Keynes' whole big deal in his General Theory. Before him the groupthink in academic economics was all circled around labor supply and labor price being out of equillibrium with the market.

Then Friedman came along to establish monerarism. He wanted monetary policy along the lines of a k percent rule, and not to try to manage AD (discretionary MP). So no, it's not monerarist, it is in dact Keynesian.

>And you do need an institution that acts as a firewall to prevent temporary liquidity issues from turning into full insolvencies via self-fulfilling prophecy (aka bank runs).

Economists take this as gospel, but I have never seen evidence of this. I have seen evidence it is not true. I'm with Friedman, fractional reserve banking doesn't create value, just inflation and risk.

>Strawman. Nobody relevant actually claims that. What many claimed was that QE would increase lending in the real economy, which would obviously boost the economy (because more real economy lending = more spending = more demand = more economic activity). That hasn't really happened, and I hope economists learned the lesson.

We really disagree here. I even think your comment is strangely tautological, don't you think? You said there is no one who thinks the Fed is trying a game of pulling on some levers and creating more value in the economy, but then you went on to describe the Keynesian argument for how the Fed pulls some levers to magically create value (by stimulating AD).

The argument for QE and fiscal policy is the same Keynesian one: by creating easy money, they basically create more AD, which puts to work unemployed, unused resources. So Keynesians argue, those unused resources are now put to work.

But what work are they doing? Is it useful work? Are banks just going to hoard cash, and why flood so much easy money into the banks, anyways?

I think it's really more simple than that. The Fed is just Wall St's nice insurance policy, and economists are just clever priests who justify the actions of the ruling plutocratic class.

> Economists take this as gospel, but I have never seen evidence of this. I have seen evidence it is not true. I'm with Friedman, fractional reserve banking doesn't create value, just inflation and risk.

Well, the point was about whether a central bank acting as lender of last resort makes sense or not. Fractional reserve banking existed before central banks, and if you have fractional reserve banking, then a lender of last resort is a must. There's plenty of evidence for that (in the form of regular bank runs before central banks, and practically zero bank runs afterwards).

As to whether fractional reserve banking itself should be permitted or not, that's admittedly less clear. Though I'd say that there's a big advantage to having the kind of flexibility in the money supply that comes with letting credit shrink and grow in a decentralized fashion as demanded by the economy.

I find it ironic that Friedman, who is associated with some of the worst and most ideological central planning-bashing, turns out to be an advocate of central planning when it comes to monetary policy! Seems inconsistent if you ask me...

> You said there is no one who thinks the Fed is trying a game of pulling on some levers and creating more value in the economy, but then you went on to describe the Keynesian argument for how the Fed pulls some levers to magically create value (by stimulating AD).

What we disagree about here is mostly whether there's magic involved. My point is that a large part of the underlying theory is sound (though not all of it), and your claim of voodoo is greatly exaggerated.

The question of whether the work being done is useful is an important one. That's why I've always been against (or at least skeptical of) QE, actually, though I think that fiscal policies that often come up in the same discussions could be quite useful. For example, you could just transfer a fixed amount of money every citizen ("helicopter money") to boost the economy, and scale it down if/when inflation exceeds your target. That way, the usefulness of the additional work would be guaranteed, by virtue of being work that the people decide should be done.

I am aware of your point about a lender of last resort and am aware of the history of banking. I think you talked yourself already into understanding my point though: that the Fed's bank guarantees are only necessary because we stupidly allow fractional reserve banking.

By the way Friedman was not an advocate of central planning, even with monetary policy. He even advocated getting rid of the Fed., but when he realized it would take a revolution to do that, conceded they should at least use a hard rule, like I've been saying the k-percent rule, and not use discretionary monetary policy.

Friedman could be cold and harsh at times which earned him controversy, but his expertise in monetary policy was part of why he won the Nobel, and the only reason he is ignored is because they are inconsistent with the profit motive of the financial sector.

It doesn't and never has. There has never been a one to one match between money and stuff. Money is really the emodiment of a human promise, and promises don't always get fulfilled.

The one promise that does, is if you don't pony up the correct currency to pay your taxes you go to jail. And that is what drives a currency at root.

What is it an exchange of? What is it storing? What is it measuring?

In other words, we use it to help us with exchanging, storing, and measuring real value. This way you don't have to exchange some lines of code for a cow, or store all your wealth in cheese.

Maybe you are thinking that I am saying something about money not being a fiat currency, which wasn't the point here.

Depends on how you define money. In the case of hard assets like gold there is a one to one match because gold represents energy already spent.

That's debatable. I'd say they prevented some much needed corrections from happening. The housing bubble is back - prices have recovered to 2006 levels or higher. People are less able to afford things at those prices. Also, home prices vary inversely with interest rates and rates are still near their lows with really only one direction to go.

If bailouts are effectively revenue-neutral there's a whole line of arguments against intervention that disappear. Though of course, like you said, there are distortions

> ... at the price of speculative distortions

That's really all there is to say and the main argument against Central Banks.

PS: A nice analogy would be: They got rid of the hens by burying them in eggs.

Not really arguing "should" here, nor am I arguing that the supposed profits were real. Just pointing out a big difference between the federal government generating revenue and the federal reserve printing more money. If this were not true, then why would would have taxes? The Fed could just print money any time the government needed to spend it.

Yes it can. Banks do that all the time. Money grows and shrinks to ensure all the transactions that are worth completing gets completed.

It's a dynamic system.

"If this were not true, then why would would have taxes?"

You have taxes, so you have to create output and hand it over for the currency the taxes are denominated in. That's how output is transferred to the public sector.

The public sector then creates the money necessary for you (and everybody else transitively) to pay those tax demands.

When government spends it will create the taxation that balances that spend to the penny for any positive transaction. It's a simple geometric progression.

Unless somebody in the chain decides not to spend all their income. We call that saving.

The maths is straightforward... https://medium.com/modern-money-matters/the-function-of-gove...

The Fed cannot net print money without devaluing what's in circulation. Inflation is literally the fact of more money chasing fewer goods. More money => more inflation.

The question then becomes "how might money leave the system?" There are several ways.

Taxation, if you subscribe to MMT, is money leaving the system. (Government spending is, as with Fed policy, creating money.)

Increasing or decreasing the overall amount of consumer and business debt increases or decreases the money supply.

Increasing or decreasing the overall value of financial assets -- stocks, bonds, derivatives, real estate, commodities -- by increasing or decreasing collateral and balance sheets, increases and decreases the money supply.

Money going into savings, particularly off-shore accounts (where it's not otherwise available to the financial system) is effectively withdrawn, through the mechanism of reducing the velocity of money. Other factors effecting money velocity do likewise. (This is, essentially, how often a given dollar is transacted.)

The more accurate answer would be that: "The Fed can't print money without devaluing the money already in circulations, unless there are offsetting withdrawals to they money supply".

Well, the way this actually happened is that a few trillion dollars simply evaporated in 2008. The Fed "printed" a few trillion dollars to keep the few trillion that evaporated from destroying the whole system. That few trillion that the Fed created didn't devalue the money already in print; instead, it kept things the same.

Now, you could argue that the few trillion needed to be destroyed to undo the devaluation that had happened by its creation. That's a reasonable argument. But doing it very fast can cause a lot more damage than doing it slowly.

The Fed's action countered that. Inflation would have been negative in the absence.

The Fed increased inflation relative to the non-intervention case.

The U.S. Treasury turned a profit on TARP. TARP debits and credits work just like any other government expenditure.

A lot of pundits lump TARP with the Federal Reserve's quantitative easing (QE) program. QE was a program where the Federal Reserve itself purchased assets (mortgage securities, bonds, etc). The assets to purchase these were much more akin to printing money, I suppose. And this program was much larger than TARP in dollar value. This asset purchase program has turned a profit for the government because dividends, resales, etc, have exceeded the outlays. The Federal Reserve must, by statute, transfer such profits to the Treasury.

I say "I suppose" because _anybody_ can print money. For example, I can give you an IOU in exchange for gold bars. You can then put that IOU on your books as an asset, which in turn allows you to borrow against it, perhaps getting even more gold bars of your own if you can convince others the IOU was worth more than you paid. We got into this mess because the investment banks were, conceptually, printing money by assembling mortgages into securities and then reselling or borrowing against the securities for a price (in retrospect) far greater than the long-term return of the underlying assets. Derivatives markets then multiplied the differential many fold. In all these cases nobody actually prints currency notes; nonetheless, the total dollar value of assets on the books has increased.

I don't think it's very useful to equivocate all these financial machinations. Papering over them is precisely how we got into this mess.[1] And while I guess it's fair to say that the Federal Reserve can print money, the implications of that are neither clear nor inevitable. The Federal Reserve has a legal mandate to keep inflation rates low. Often people are trying to allude to the specter of hyperinflation. But it's worth remembering that the hyperinflation in Weimar Germany was very much _intentional_. The Germans pursued hyperinflation to spite the WWI allies, as it allowed them for a time to minimize the effect of war reparations on their domestic economy (if they printed money fast enough, they could purchase foreign currency before the official exchange rates reacted[2]). Eventually it became something that they were, politically, unable to roll back. Hyperinflation in Zimbabwe was a self-fulfilling prophecy, and a symptom of a failed state, similar to the tail end of the Weimar Republic.

Note that in both cases these events were fundamentally driven by politics. If the Federal Reserve ever got itself into a situation where it couldn't stop pumping assets into the system, it's almost certain that it would have been preceded by Congress first changing the laws. Currently the Federal Reserve is substantially (though not completely) independent from political forces. In any event, if the Federal Reserve ended up in that sort of situation it would undoubtedly be symptomatic of much larger problems in the country.

[1] Thinking they're unnecessary and could be done away with is naive. The book-value of assets will always involve guess work because it requires people to quantify the likelihood of future events based on imperfect information about the present. And there will always be mechanisms that compound errors in this guess work. The way you control systemic risk is through diversity and uncoupling.

[2] Ironically, the gold standard made this arbitrage both feasible--it took longer for individual exchange rates to react--and was a central cause--the gold standard caused severe deflation across Europe. Deflation sucks for debtors, and war reparations made Weimar Germany the biggest debtor of them all.

Why severe deflation across Europe? It coincided with the apex of the industrial revolution in the U.S. The U.S. was pumping out radios and refrigerators like crazy, and Europeans were buying them up like hot cakes. Because everybody was on the gold standard, and because every central banker refused to readjust their exchange rate with gold, increasing amounts of gold in all the central banks in Europe were credited to the U.S. account balance. That meant less gold per unit of national currency, which meant deflation. The way inflation in the U.S. occurred is that Europeans began purchasing U.S. securities, because each unit of domestic currency purchased increasing amount of American dollars. Likewise, repatriated profits were dumped into the stock market. This is how the gold standard directly precipitated the stock market crash of 1929.

Something similar is happening between China and the U.S., except that the U.S. dollar is a floating currency and China is attempting to avoid domestic inflation by preventing the repatriation of assets (that is, China effectively forces producers to invest their profits in U.S. securities). The end result is that deflation is blunted in the U.S., but it's a huge reason why despite QE we haven't seen much inflation.

You write:

> The end result is that deflation is blunted in the U.S., but it's a huge reason why despite QE we haven't seen much inflation.

My view has been that a pretty solid chunk of inflation has already happened, in the housing market, as measured by the change in house prices since ~Y2K, and by the expansion of the Fed's balance sheet by ~2T in MBS purchases. QE acted as a way to pay off the jumbo loans made to retail workers, house flippers, etc that were too large a burden for them to pay. What do you think of my theory?

Asset inflation is a rather distinct thing from across-the-board inflation, which would have to include wages.

Actually, it seems that Zimbabwe was a case of supply shock, not of "printing" too much:

'[..]A rapid demand contraction was required but impossible to implement politically given that 45 per cent of the food output capacity was destroyed.'

http://bilbo.economicoutlook.net/blog/?p=3773

You wrote an interesting post, by the way.

Nonetheless, thank you for the interesting and informative post.

On some level it's all as simple as we intuitively think it is. I think the difficulty is coming to the realization that it's turtles all the way down--there's no magical, true price where book-value perfectly reflects all "real" assets. This dynamic complexity is most apparent when you dig into currency exchange rates, where you very often get very counter-intuitive results when you [literally and figuratively] follow the money. I'm by no means an expert, either in finance, accounting, or math. But I did study international economics in undergraduate, which has helped me to internalize the notion that there's no "true" price to anything except for what others are willing to exchange at any one moment, given all their imperfect information and incentives. And in graduate school I took an economics course with a professor who wrote one of the first studies (commissioned by Toyota) that empirically showed how exchange rates fluctuated in response to current account surpluses and deficits, in turn effecting demand & supply--a phenomenon everybody now takes for granted but which was not widely appreciated at the time even though it's obvious in retrospect. He really only mentioned it in passing one day, but the concept really stuck in my head and has helped me to conceptualize (albeit very imperfectly and at a high level) that valuation is an ongoing process; quantifying it at a fixed point in time is less meaningful than we intuitively believe.

But don't take my word for any of this. One of the most enlightening books I've ever read is "Lords of Finance: The Bankers Who Broke the World", which won the 2010 Pulitzer Prize. I read it in 2010, shortly before I read The Big Short, because of the accolades and because I wanted some context to the economic crisis. It's partly a scholarly work which makes it little dry, but its still very accessible. Basically, everything I said above about the role of the gold standard in the interwar period (WWI to WWII) comes directly from that book. Reading the Big Short explains how the mortgage-backed securities market works. It helps to have some grounding in economics to really maximize your dividends from reading those books.

Case in point: if my house appreciates on the market by $100K, I am $100K "richer"; this by itself doesn't increase the circulating money. But if I'm able to borrow $100K by mortgaging the increased value of my house, now I have $100K more to spend. The lender has $100K less in their bank account, but they now have a mortgage-backed security which is worth $100K and that, if there is a liquid market for such securities, can be almost as good as actual dollars for trading. The circulating money has increased.

It gets even worse. If the lender and/or the borrower use even just a part of those $100K to speculate in the housing market, the bubble will accelerate... until, at some point, enough people actually want to use their new riches to buy products that aren't part of the asset bubble, and producers of those products don't accept those inflated securities as payment. Then, the bubble bursts.

And, by the way, this whole mechanism has nothing to do with bad central banks or fiat money. It's perfectly consistent with a perfect free market AFAIK, and the only (not easy at all) way to prevent it is regulation.

I don't know if QE3 was entirely apolitical. it felt unnecessary in its scale and made sure the markets were well juiced before the 2012 election.

it will be interesting to see where this takes us. i dont think an economy has been in this situation before. hopefully some natural growth can take over because it feels like we are in The Bubble. The bubble of bubbles. The only thing is, there is so much money in the market it has no where to go.

That seems backwards to me. Wouldn't less gold per unit of national currency mean inflation? Each unit of currency equating to less gold means that it's worth less. In deflation, it would be worth more.

Is it fair to say that you disagree with the original poster's pessimism (that appears to be quite popular at the moment with the HN crowd)?

When QE first started, conservative analysts were swearing up-and-down that we'd shortly see inflation. That has yet to happen. A couple of years ago some more mainstream analysts (as well as the market) were predicting 20-30 years of extremely low inflation. But today the mainstream is much more unsure about long-term rates. Neither group seems right or wrong to me; more that they underestimated uncertainty, rather than misjudged risk. Unfortunately, that doesn't stop them from qualifying their assessments after the fact and claiming that _now_ they're more certain, just with larger error bars.

Even if we presume that we are in a bubble and that this bubble was created by QE[1], that still doesn't tell you much of anything. If it did there'd be many more rich investors than there apparently are; and their absence isn't necessarily just a reflection of their inability to time things precisely. The _determinative_ factors going forwards aren't necessarily the big, obvious factors in the prelude.

But I'm neither pessimistic nor optimistic. I'm personally more interested in how the clock works, not what time it is.

[1] QE added $2 trillion into the system. That seems like a lot until you realize that the U.S. stock market is $25 trillion and the U.S. bond market is $35 trillion. And trade in U.S. assets is part of a global market, which is greater than $100 trillion in stocks and bonds alone. Many other commenters on HN are much more knowledgable than me, but in light of those numbers I don't see anything obvious or inevitable about the ultimate effect of the Federal Reserve's QE program. I can understand, superficially, how QE _could_ theoretically effect the system. Even at a substantially lesser amount other factors could compound the intervention. On the other hand, theoretically QE could have had almost no effect whatsoever (other than the timing preventing a collapse), simply displacing $2 trillion of foreign investments that would have resulted in the same asset prices we have today.

EDIT: The most recent information I found Googling shows close to $200 trillion in stocks and bonds in 2014 (<$60 trillion public debt), and almost $300 trillion in global financial assets (stocks, bonds, and other loans). See http://webcache.googleusercontent.com/search?q=cache:4MeIUgO...

"Using confidential loan officer survey data on lending standards and internal risk ratings on loans, we document an effect of large-scale asset purchase programs (LSAPs) on lending standards and risk-taking. We exploit cross-sectional variation in banks’ holdings of mortgage-backed securities to show that the first and third round of quantitative easing (QE1 and QE3) significantly lowered lending standards and increased loan risk characteristics. The magnitude of the effects is about the same in QE1 and QE3, and is comparable to the effect of a one percentage point decrease in the Fed funds target rate."

https://www.federalreserve.gov/econres/feds/files/2017093pap...

https://www.csmonitor.com/Business/The-Circle-Bastiat/2010/0...

That said, it does get me going. What this story is telling you is:

1) Futures on US treasury bonds are going to fall, as the DOT unloads 42 million of them. This is a lot, and it will affect the value of your investments/401k in a non-trivial way.

2) Equities(and futures based on them, e.g. ES/NQ/DJIA) are going to rise, simply due to their inverse relationship with treasury bonds.

3) Commodities(such as oil, gasoline, natural gas) will increase in price.

4) Foreign interests will have a "fire sale" of US debt available to them for purchase. Whether or not they will buy it is anyone's guess. I'd say "if you know, you should tell us!", but we all know that won't happen.

What does this mean for the average investor? Short on bonds, long on equities. Your 401k or other managed investment portfolio is likely taking this approach on your behalf anyway(if they aren't, fire them and find one that does).

Edit: If you want to know what these particular financial instruments are and how they work(bonds and how they are traded), see here: https://www.cmegroup.com/education/files/understanding-treas...

I think its important to note that the Fed is not going to start selling their holdings, they are going to stop reinvesting the proceeds as much (they haven't bought any additional assets since 2014, reinvestment aside). This should have a much more muted effect on the market -- letting a ~1%/month of bond assets mature without reinvestment is not the same as selling 1%/month.

>4) Foreign interests will have a "fire sale" of US debt available to them for purchase.

Again, the Fed isn't selling anything. They are partially curtailing demand by reducing reinvestment which will likely affect bond prices and yields, but not nearly as dramatically as selling them pre-term.

Also wouldn't it be pretty easy to make some money off of these oh so sure events?

In fairness I'm always wondering this when folks predict such things.

And why point 3? Is this from expected currency devaluation?

Wasn't the action being taken in the article simply a cap on the amount of reinvested bonds? Doesn't that lead to a gradual decrease in purchases of mature bonds rather than a "fire sale"?

I'm not challenging your position, I am just seeing a terminology mismatch between your comment and the content of the article. I, a financial layperson, am likely not the intended audience of the article, which appears to be targeted toward economists or otherwise well-informed readers.

Just my 2 cents, but I think they are a huge bubble, and at some point they've got to pop. I wish I had the equity for a very-long-term short, but unfortunately I don't.

How so? QE was heralded by critics as printing new money, leading to a price boost in equities and commodities since the money had to go somewhere in search of yield.

Wouldn't the opposite of QE decrease the supply of readily available USD, so the suppliers with a glut of a certain commodity are then forced to compete for whatever cash is left?

All else being equal, rates going up will increase the value of the US dollar. If most US companies derive a majority of their revenue overseas, will that be good for US equities? And that's just one consideration. Point is,from a trading perspective, it's generally not helpful to make blanket assumptions as the market can stay irrational far longer than most think.

If the equity markets were buoyed significantly by policy, then unwinding this would have the inverse effect.

A disclaimer to all this... this is what I observe day in and day out trading bonds for a living. It doesn't mean that's what is going to happen, this is just what I've seen in the past.

Edit: I looked it up and T-Bonds start at $1k

https://lara-murphy.com/podcast/episode-42-feds-plan-unload-...

Pretty much no matter what it is going to be something economists are going to debate for the next 100 years :-)

Market keeps going up because we continue to have global growth. Over 66% of countries are showing positive GDP and growth. US growth is also fairly high. Historically GDP averages around 1.8%. The talk of 3% is just politics.

In addition, technology has created a lot of efficiency providing healthy profits for businesses.

In addition, there is a high feedback loop of spending by all major businesses. Example: apple produces phones that require a lot of software and hardware to work which means a lot of other companies involved which also creates competition among multiple phone companies to also produce something similar and so on.

Yes we are at a fair valuations and I sincerely hope for a 10-20% correction. But we are in a 20 year bull run with minor bears in between.

About money printing. Yes I agree some day one of the central banks will be trouble but other will bail it out.

Also cheap money is good. It helps mid to lower income families come up. Micro loans are good example of it. Why can't lower income generating families have access to cheaper money ? Why do they have to pay 8-10% interest?

Imagine if you were from a low to mid income family, wanting to go to school won't you want cheaper loans. And if people abuse that privilege then they will pay for it. If you are just getting out of school and need some house loan etc. won't be bette to have easy access to money? Or do you want 8-10% interest ?

Yes I agree a lot of money has been printed but it has created healthy money vilocity that has gone appropriately to create value for everyone.

World was much worse 15 years ago just go back and look.

Not if everyone has access to easy money, no.

House prices are roughly set by prevailing rents. Take the cost of renting and the cost of ownership and set them to roughly equal. Now, drop interest rates on mortgages a couple percent, what happens to house prices? Monthly payments of mortgages go down, renters and potential landlords see it and try to win bids for houses, driving housing prices back up again.

Much the same thing is, IMO, going on with college prices: since they're largely financed, easier credit leads to higher bids. I'd much rather have college affordable period on a part-time entry-level salary than have interest rate times tuition be affordable on a white-collar salary.

Basically, lower interest rates doesn't particularly help future borrowers. Falling interest rates helps folks who hold assets and can sell them or refinance the debt servicing them.

> US growth is also fairly high. Historically GDP averages around 1.8%. The talk of 3% is just politics.

The average annual GDP growth by the US since WW2 is 3.2%. That's for nearly 70 years. That's not politics, that's fact. That figure would be even higher if it weren't for the last ten year economic dead zone being included.

Growth from 1870 to 1940 was even faster than that, due to growing off of a smaller base and the post Civil War rapid industrialization period.