“RATES MUST RISE TO AVERT NEXT CRISIS” (July 15, 2015)
Thus the Financial Times today. “Capital is being driven into increasingly speculative investments,” elaborates the newspaper. Indeed. Seven years of near-zero prime rates of interest across the rich world cannot but feed yet another financial crisis. Last time around, it was real estate. This time, it is all sorts of things minus real estate. But it was the Federal Reserve that fed the ballooning of the economy both times. Following Alan Greenspan’s unwise lead, Ben Bernanke drove the prime rate of interest to unprecedented lows. So far, Janet Yellen has not dared touch the key instrument of monetary policy up to Bernanke’s term of office. Year after year, all the other central bankers in the rich world have been following their lead quite diligently. Slowly but surely, capitalism is running amok. Speculative investment has become the norm, as only befits dirt-cheap capital. Combined with an unprecedented number of extremely rich people, who owe their very existence to Bernanke and his ilk, the world has become a gambling game for the precious few. And the rules of the game are being pushed hither and thither at their own whim…