Bread is now $3.50 a loaf and gas is $3.50 per gallon. Ben Bernanke and Ms. Yellen must not be aware of the inflation that is making life very difficult for the middle class.
“Bread is now $3.50 a loaf and gas is $3.50 per gallon. Ben Bernanke and Ms. Yellen must not be aware of the inflation that is making life very difficult for the middle class.”
What do they care? They’ve got their gated communities, armed guards, and private planes to wisk them off to a remote island when the time comes.
They don't care about inflation, and they don't care about investors. All they care about is the rate that the Treasury has to pay to borrow (create) money.
The Treasury is broke and our credit is in such a sorry state that we cannot sell enough bonds to cover our spending, not at sub-inflation rates anyway. That is why the Fed is creating all of this imaginary money. They are purchasing bonds in order to keep the interest rates low.
Of course private lenders won't put their money at risk for such pitifully low rates, so the capital market is frozen.
The day that the Fed allows interest rates to rise is the day that the U.S. Treasury implodes. The Treasury has been doing the equivalent of rolling principal from one high rate credit card to another, paying just the low transfer cost and then doing it again before the grace period ends.
We can't pay the 2% interest now, wait unit it is 5%, 6%, 8% or 15%. We have created the perfect formula for double digit inflation, and that will drive double digit bond interest. At 15% the interest on our debt will take every dime of our revenue.