The Daily Inflation is announcing today through its website its criticism of the Fed policies which are helping divide the country between the Rich and Poor.
Monetary policies are usually described as being expansionary or contractionary. The former aims to speed up an economic growth, while the latter attempts to slow it. The thought behind an expansionary policy is that it would increase employment levels in an economy by lowering interest rates in the hope that easy credit will encourage businesses into expanding. This is done by increasing the money supply available in the economy. Central Bankers have an incentive for Inflationary montetary policies. It does work in the short term. But is it worth it over the long run given its negative effects on citizens who save money?
The Daily Inflation does not agree with the views of “unlimited money printing”. QE undermines credibility and causes excessive risk taking which can lead to unintended consequences.
Many famous stock market commentators such as Jim Rogers, Peter Schiff, Jim Rickards, Mike Maloney have criticized the Fed on their economic policies. According to Doug Kass a famous Wallstreet short seller "Pushing stock prices ever higher should never substitute for prudent monetary policy and/or responsible fiscal policy. This always ends with a very bad hangover."
Another famous stock market commentator Marc Faber aka Doctor Doom said his thoughts on QE, "The Fed will continue to print and if the stock market goes down 10%, they will print even more. And they don't know anything else to do. Now, the consequences of these monetary policies and artificially low interest rates is of course that the government becomes bigger and bigger."
The current economic climate the world is facing is a period of a new normal and of unprecidended world wide loose monetary policy. Its consequences can be harsh on people that save money and are disciplined. This category of people, the Savers, should be wary of the value of their savings being reduced in stealth like way, slowly over time. Janet Yellen should raise the rates regardless of what the stock market does this year even though it may not be an easy decision.