[quote=FlyerInHi]
Faced with inaction from congress on the fiscal side, what’s the fed to do? Bernanke did a masterful job holding down interest rates to benefit mortgage debtors and businesses who can borrow and invest.
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Did businesses borrow to invest or did they borrow to pay special one time dividends and/or do share buybacks. If businesses were borrowing to invest don’t you’d think you see an significant improvement in earnings and corporate growth 3 years into this policy. Did banks or other short term traders borrow to speculate in assets prices. Does that speculation grow the economy?
Bernanke made borrowing easier and people did so. The problem is that many people borrowed and invested in things that produced asset price inflation rather than growth. There’s going to be long term consequences to this action, we just haven’t seen them yet.
