The true problem is that QE represents a wealth transfer to the richest among us. New money (which is more powerful at its introduction into the money supply) is funneled directly into equity markets or into foreign markets, creating massive asset bubbles, enriching the rich and robbing the poorest through inflation.

To suggest that massive Fed bond buying is not THE cause of low interest rates is ridiculous.

People and institutions that already have plenty of money are "hoarding cash" (and real estate) because, after other needs are taken care of, what remains is a concern about security if something unexpected happens. They don't see profitable investment opportunities worth the risk.

Growth can and will return when the rentiers are lanced with land value tax, as the primary vector for money creation by banks is lending against land. When this ends growth returns.

I believe the notion of artificially low/high rates actually does have a precise meaning. If banks freely set rates as players in a competitive market based on prevailing inflation rates, demand for money, etc, that would be the "market rate" of money. "Artificially low" rates would be those rates set centrally which are lower than what the market rate would be in a competitive rate market.

Now it very well may be that zero would be the market rate of money, and the Fed is doing a great job of estimating it. But to say the notion of artificial rates has no meaning is a little odd.

But, they do.

Of course, "inflation rate" is in large part a product of monetary policy.

> Now it very well may be that zero would be the market rate of money, and the Fed is doing a great job of estimating it.

The Fed sets interest rate targets, and then directly takes action which affect those things which you suggest should be the inputs by which the market sets rates, which the market then actually takes as inputs, and sets the actual interest rates that are levied in practice.

> But to say the notion of artificial rates has no meaning is a little odd.

The notion of artificial rates has no meaning, because the things you suggest should be inputs in "natural" rates are not products of nature, but themselves "artificial" in that they are in many ways influenced by policy, and the first of them is not merely substantially influenced by monetary policy, its one of the two main things (alongside, but usually ahead of, employment) that monetary policy is aimed at controlling.

And, as a consequence, what you describe as the mechanism for "market rates" as opposed to "artificial rates" is the predominant way by which central bank interest rate targets are achieved.

Exactly. The Fed has very few mechanisms by which to inject money in the economy. Nothing they do dictates interest rates, but they can influence specific rates through open market operations. But you (and the banks) are free to charge whatever rate you want.

There's no shortage of money, just a shortage of people and companies willing and able to borrow it.

(There are some subtleties here over things like the central bank "deposit window")

https://bankunderground.co.uk/2015/06/30/banks-are-not-inter...

Central banks QE is stopping an implosion. Banks issued money that could not be paid back as one must pay back the original fee and interest. You have to keep issuing more money into the face of this or it collapses. You do this by reducing rates. Then you hit zero and people cannot borrow more. Then central banks have to step in to plug the yawning chasm which is borne of banks saying they were creating wealth whilst in fact they have been appropriating labour and when the apex is reached you get to see the truth.

And you can't get that back. We took fiat tokens and they drank real wine, used real gasoline etc and all in exchange for fiat created ex nihilo.

More fool us.

ps looking forward to a hacker news "your submitting too fast (on a topic about finance on a site where VCs lend you fiat and you return your labour)"

Central bank cash is agnostic as to whether you invest it in store-of-wealth assets or productive assets, so it's businesses and investors that make the decision to invest in the former instead of the latter. It seems silly for the OP to blame the central banks in this matter.

I think this is easily explained by economics alone: We're "printing money", only for the bulk of it to end up in fewer hands. Gen Y has no sense of future solvency based upon the miserly behavior of their parents and grandparents. Who basically were handed everything and decided really it was all theirs and no one else's. That their offspring should go out and rebuild the world again, while they hang onto all the useful capital. It's theirs, they did it on their own!

It makes sense for Gen Y to hang onto everything, cause really they have very little. At least, much less than their parents did. I don't have the link, but a study recently suggested Gen Y is going to make nearly $100k less over their lives than Gen X.

A ridiculous sense of entitlement is the problem when you're talking about the problems with our economy. Some how providing basic broadband service to everyone is not a right, never mind the real value it would bring to people that need it most (with bullshit arguments about how it's hard to run wires across the country. Was easy enough to build these giant concrete freeways though!). But being wealthy enough to own 7 homes and two dozen exotic cars is. Somehow, releasing a new iPhone every 12 months is a necessity (and all the efforts that make it happen). But the much smaller chore of proper mental health services are not. Somehow releasing a barely improved fleet of modern cars every year is a necessity. Basic healthcare is not.

We keep seeing bubbles because we keep putting tons of effort into ventures that benefit fewer and fewer people. We "fixed" things after the last bubble, but people are still becoming more and more disenfranchised. There's less buy-in, so a new bubble comes along of hype, the economy is getting better.... Oh wait nope cause we're letting too many people fall beside the wayside. They lose interest, quit investing, stop caring. Whatever it is.

The economy as a whole is only going to remain stable once we act more inclusively. Or we'll just keep seeing these financial bubbles, that are, IMO, really caused more by quickly getting buy in and turning things around, only for our shitty attention spans to kick in and realize 5-10 years later things are still shit in the real world.

All this extravagant bullshit we're told will improve us! Staring at this shit is important! Get pissed over headphone jacks! So we keep pushing for these bullshit things, and protecting that pipeline, which I think people are maybe realizing is just a sick joke.