E Fed Monetary Errors Could Have Made The Great Recession Much Worse

This plan to slow the growth of wages, especially in manufacturing, to reduced house prices from bubble territory, to weaken the middle class wealth and worker wages, and cause banks to continually profit from low interest rates "succeeded". But what will be the cost of this decimation of America's working class going forward?  Will recessions deepen going forward because of monetary policy decisions?

Perhaps a strong middle class in America is essential to the strength of the world economy. Central banks, with the Fed in the lead, could have tried to preserve many of these well paying jobs by targeting NGDP. They are now being replaced by lower paying jobs.

In the Great Recession, the banks got houses back, received guaranteed mortgages if they didn't short sell, and bailout money. The banks won in major fashion on bets on low interest rates in the swaps markets as rates continued to drop even further. There are new demands for bonds as collateral, that constrain interest rates, even when growth occurs.

And, if something doesn't change, in order to establish a successful and healthy reflation, we could be facing cashless societies and negative interest rates. I wrote about those here and here and here. 

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Disclosure: I am not an investment counselor nor am I an attorney so my views are not to be considered investment advice.

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