The U.S. economy is appallingly dependent on the “wealth effect.” And the U.S. Federal Reserve knows it.
Just how “easy” is the Fed’s monetary policy? The real Fed Funds Rate (FFR) is at -0.8% right now. The last time the inflation-adjusted FFR was down at -0.8% had been 8-9 months into the Great Recession (10/2008). Before that, the country had been 8-9 months into the 2001 recession (12/2001).
Pushing the cost of capital to insanely cheap places used to be a tool for alleviating recessionary pressure. Today? The central bank of the United States believes