Bernanke-care is creating liquidity addicts

Posted By on October 25, 2013

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As a student of economics, a business manager and as a hesitant investor, I’m concern about what is going to happen when the Federal Reserve finally pulls the stimulus intravenous therapy? It is likely that Fed Chairman Bernanke is worried about weaning the stimulus too, by the fact he hasn’t started to taper. It is possible that easing back the cheap money will be the catalyst for another economic downturn. Unfortunately the longer the addict remains dependent, the more difficult and dangerous it is going to be when the IV drip is finally pulled. In the meantime, most of the stimulus is being squandered by bureaucrats or is landing in the coffers of those at the top of the economic pyramid — very little is making its way to the working class.

For all the Feds good intentions, most of middle America has not participated the way those with substantial investment portfolios, large corporations and Wall Street bankers have — in other words, not many decent paying jobs have been created. Sure there are some part time positions or temporary jobs, but very few living wage blue-collar or middle management opportunities — but who can blame employers for holding back? If the Fed’s intention was to entice companies to hire, their effort is being thwarted at every turn by big, and bigger, government, especially those policies being proposed and implemented by President Obama and the liberal Democrats. The Washington DC “knows best” heavy handed approach detours job creation and makes expanding the workforce unattractive to all employers who balance their books and answer to shareholders for their bottom line; the exception being those employed by the government (they just tax and borrow more to meet payroll). Companies with strong balance sheets are hesitant to expand in the U.S. due the growing number of costly regulations, concern for a growing federal debt and a questionable future tax code. Currently small business can’t justify adding employees due to the Affordable Care Act and established mom and pop businesses are concluding it is time to close their doors. Congress, and their next election cycle self-interest, will not address the systemic problem of entitlements, deficits and national debt … which makes even the most pro-America CEO pull back on expanding domestically, preferring instead to keep their powder dry or looking elsewhere.

The real concern is that the Federal Reserve’s easy money policy is stimulating only the well off and not generating any real economic growth. Eventually the “irrational exuberance” in the financial markets will end and all is going to come crashing down. My biggest concern is that this may happen when the Fed still has the IV in the patient and when they are already administering all the drugs that the pharmacy has to offer. God help us.

Comments

Desultory - des-uhl-tawr-ee, -tohr-ee

  1. lacking in consistency, constancy, or visible order, disconnected; fitful: desultory conversation.
  2. digressing from or unconnected with the main subject; random: a desultory remark.