From WSJopinion: Turn off the Fed bubble machine, writes andykessler. Trying to ramp up aggregate demand serves no purpose if supply is constrained.
ABC Photo Archives/Disney General Entertainment Content via Getty Images“The Lawrence Welk Show,” which ran from 1951 to 1982, was known for its schmaltzy “champagne music” and a TV screen full of bubbles to open most shows. The interest-rate-slashing Federal Reserve has been running the bubble machine ever since.
Now, with inflation feeling like it’s rolling over as the economy slows, it’s time to shut the machine down., meaning interest rates have been below inflation and the Fed has been accommodative. Accommodating what? Well, in the false hope of boosting aggregate demand and fighting deflation, they’ve accommodated bubbles, bubbles everywhere.
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