The Economic World According To Speculative Gains

As I write this, the Federal Reserve is about to embark on the first rate hiking cycle in a decade, the first since the Great Recession. In other words, it is officially initiating the exit plan which previous Fed Chairman Ben Bernanke laid out in this 2009 Wall Street Journal article. The Federal Reserve ‘entered,’ in the context of this piece, in 2008 with its decisions to slash interest rates to zero and to embark on the first of its Quantitative Easing programs. This was necessary, according to the mainstream interpretation of the Great Recession, because the patient that was the US economy found itself in the Emergency Room, needing to be saved.

At the risk of sounding inhumane, in this case the patient was not worth saving in my view. In fact, the patient/emergency room analogy to describe the current economic predicament isn’t entirely accurate. The reasons for that will be apparent by the end of this piece.