Thursday, December 20, 2018

Steve Keen - Trump warns Federal Reserve against interest rate hike

Steve Keen says that central banks don't put into their standard neoclassical economic models the role that private debt plays in the economy, and so the Fed is making a huge mistake by rising interest rates too early. He predicts a crash in 2019/ 2020.

In this 3 minute 50 second interview, I support Trump's criticisms of the Federal Reserve interest rate hikes, because I expect they (in concert with the Fed switching from Quantitative Easing to Quantative Tightening) will cause a recession in 2019 or 2020. This is because the US economy is still carrying far too much private debt in the aftermath to the 2008 crisis, and I expect that the Fed's interest rate hikes will cause the private sector to start deleveraging again.

More here

1 comment:

Andrew Anderson said...

Low interest rates are good but NOT if they are produced via immoral practices such as:
1) Forbidding the citizens from using fiat except for mere coins and bills thus unethically lowering the DEMAND for fiat.
2) Central Bank purchases from the private sector - this violates equal protection under the law too. Instead, if interest rates are too high, equal fiat distributions to all citizens should lower them.

Ethics have been ignored/mocked for far too long wrt fiat and credit creation.