I should just pin this tweet.... once again someone please explain to me how higher rates (which will mean slower job and real wage growth) will help low income families? Answer: They won’t.
The question comes back to whether they are aware of the effects of their policies and intentional about it (criminal) or unaware and unintentional (stupid).
Either way, it's a bad look.
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@neelkashkari
Hi Neel. Suppressing rates below equilibrium is akin to a price cap
That creates dead weight loss in the economy and loan shortages
It also creates incentives for lenders to allocate into carry type trades and not lend to those who need it
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@neelkashkari
My dad is 75 and wants me to put all his money in stocks since the bank pays no interest. He doesn’t have much but I put half in 3 years ago.
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@neelkashkari
Low interest rates have driven house prices up massively over the last 15-20 years. Housing would be "affordable" if rates were higher. That's just one reason.
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@neelkashkari
Seems pretty obvious, no? Manipulation of asset prices and liquidity by the Fed is destroying average american’s savings, doing 0 for real inflation (healthcare, auto, housing, edu) & continues to devalue every $ earned. We’re now damned either way. Question: how does this end?
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@neelkashkari
Mr. Kashkari, if you believe that your low rate policies directly drive job and wage growth, will you please cite evidence here? Additionally, will you please explain how the repo operations you're doing help anyone except JP Morgan, B of A, BNY Mellon, and other primaries?
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@neelkashkari
Buddy, I live in Minnetonka. I would guess that you and I live within a 25 mile radius of each other (judging by your salary at the FED I’d guess you live in Edina/lake Minnetonka area. I will gladly meet up with you and explain to you why you don’t understand this.
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@neelkashkari
Are you financially tone deaf? An economy that for ~100 years built on a system of saving, with pensions tied to an expected return rate, and retirees trained to buy bonds for safety, is totally upended by
@Fed
and you ask THIS? Holy cow....
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@neelkashkari
(1/3) Here is the issue: By not only putting the policy pedal to the metal, so to speak, in downturns ... but leaving it there for far too long (even well into a recovery in the underlying economy) - you foment/encourage/fuel asset bubbles.
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@neelkashkari
(2/3) You also encourage extraordinarily reckless borrowing/lending/investing behavior far too far into the credit/economic cycle. That, in turn, creates enormous future financial instability risk. Or in plain English, you try to sustain/extend the unsustainable/dangerous
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@neelkashkari
(3/3) By doing so, you ensure a popping of the bubble. That wrecks the markets, wrecks the economy, and ensures joblessness will surge and wages will suffer. That is the lesson of the last two cycles, and will be the lesson of this one. Period. End of story.
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@neelkashkari
PCE is below 1.7%. Yet stocks and real estate have absolutely exploded in value. Who owns 84% of stocks and real estate? The top 10%. Whose policy magically shifts on a dime everytime the S&P drops? Yours.
Your policies are just underfunding the 1%. Worst of it is: You know it.
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@neelkashkari
Of course the markets will tank. This will hurt everyone, but the the alternative is to blow the bubble bigger and make the absolutely guaranteed bust worse by continuing with your current policies. Hyperinflation will destroy everyone.
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@neelkashkari
Low Rates are gutting pensions. This has caused significant tax money to be diverted into pension funding. Higher Local Taxes and Fewer Services disproportionately hurt the poor.
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@neelkashkari
Explain to me how bailing out GS and others and goosing markets to historic valuations helps? If more money were invested into more productive investments everyone would benefit. Your blind strategies reward speculation to the dismay of productive investment.
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@neelkashkari
By keeping rates artificially low you promote inflation. Inflation is a tax on poor. My grandma sees how everything has become very expensive and yet the Fed doesn’t see inflation.
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@neelkashkari
I wonder if Neel realizes we had a notable drop in unemployment, but more importantly, a pick up in wage growth FOLLOWING QT and rate hikes (which only just ended)?
Funny how Neel selectively picks Fed policy moves, timing and outcomes to justify his claims.🤔
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@neelkashkari
Dear Mr. Kashkari, please put in place a plan where the FED lend money directly to low income people and then we can discuss about it
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