[quote=pri_dk][quote=CA renter]Alan Greenspan lowered rates and pegged them there for far too long, forcing everyone further out on the risk curve in order to obtain a decent yield.[/quote]
The fed loans money in order to provide liquidity and help capital flow to the businesses that drive our economy.
The Fed doesn’t (and shouldn’t) care what kind of yield anyone gets in their savings account.
I know capitalism is a dirty word to some, but it is the the system that is most beneficial to all when the rules are in place so that risk and rewards are allocated properly.
Risk takers should be rewarded when they make the right choices: Invest in a new company that is successful and you should receive a nice return.
But there’s a reason it’s called “risk:” If investment doesn’t work out, you should lose.
I agree with the basic gist of the “trolling” OP:
The financial markets are still configured so that outcomes for the bankers and derivatives traders are limited to “I win” or “you lose.”
We still do not have a properly functioning capitalist system, but this problem is only peripherally related to the Fed. (There are plenty of other criticisms of the Fed, which may or may not be valid, but CAr’s point #5 simply doesn’t make sense. )
Point #6, however, is very much on the mark.[/quote]
In a truly “capitalist” system, rates would be determined by “the market,” not by the Federal Reserve. When they push money into the market (which might not be matched with true demand via productive businesses needing to expand, etc.), it is supply-driven, not demand-driven, and this means that they are pushing money into the economy that **might** be used for productive purposes, but it could just as easily be used for speculation.
While I know that many believe “risk takers” deserve to make lots of money simpley for “taking risk,” I would disagree. It creates an environment that is ripe for ever-growing speculative bubbles that distort markets and end up causing far more damage than any good they create during the up cycle.
