The Fed is a price fixer it fixes the price of short-term credit. If there's an increase in demand for credit, interest rates want to rise. But because the Fed is fixing the price of credit to keep rates from rising, it has to create more reserves or allow banks to create more money, and that's what leads to bubbles.
More Quotes from Paul Kasriel:
When you print money, it's going to inflate some asset price. Maybe we'll revert to the late 1990s and buy stocks with it.Paul Kasriel
You're essentially renting from your bank with an option to buy,
Paul Kasriel
Nobody wants a strong currency, and since the U.S. currency is fundamentally weak, foreign central banks need to buy up dollars to keep their currency from appreciating.
Paul Kasriel
In 1987 we had a sharp increase in long-term interest rates and a stock market crash when there was a run on the dollar. While a lot of people think a weaker dollar is a good thing, it essentially makes us poorer and turns out not to be a good thing.
Paul Kasriel
What'll happen is you'll see bond yields spiking higher, the dollar spiking lower and the Fed then having to raise rates, ... At that time, housing will probably start to weaken, stocks won't do well, and our standard of living will go down.
Paul Kasriel
If people start losing their jobs, ... it's going to be hard for them to keep current on all that debt.
Paul Kasriel
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