All the actions by the Fed since the financial crisis which started in 2008 (and really long before that) have basically amounted to a giant safety net for big business. Small business and savers have been left in the cold.
The Fed has kept interest rates below anything close to what the market wants for fear that higher rates might trigger a down leg in the ongoing recession/depression. Meanwhile savers, the core of what used to be the American economy in many ways, get nothing on their money unless they go much farther out in terms of risk than they should.
Higher rates probably would spur a move down in the economy, but in the wake of the flood we would likely see a new and much more “real” feeling economy. But Citibank can’t have that, and Washington DC with all of its debt absolutely can’t have that.
(From Real Clear Markets)
The Fed has constructed a safety net for government and big business. The upside is that hard calls implied by the financial crisis – to cut government spending, to reinvent an industry – don’t have to be made because the status quo can continue fueled by easy credit. The downside is that we now live in an economy where it is increasingly difficult to distinguish between real economic growth and symptoms of another bubble. This is at the heart of what CEOs mean when they blame Washington for creating “uncertainty.”