Morici: Easy Money Is Crack Cocaine of U.S. Economy
At its most recent policymaking meeting, the Federal Reserve was expected to begin dialing back on bond purchases but balked, because economic growth and the jobs market have simply not improved as much as Chairman Ben Bernanke anticipated.
The fact is those won't adequately improve until the president stops campaigning and starts seeking pragmatic and less antibusiness solutions, and the GOP stops clinging to myths like health savings accounts can replace Obamacare and bring down the prices of medical costs.
Easy money is like a narcotic. It can make a terrible toothache feel better, but it won't fix it. Taken long enough, it becomes addictive and wrecks your health.
Cheap money is causing housing prices in many markets to overinflate, stock prices to rise and many companies with failing business models to stay afloat by selling junk bonds to investors betting they can collect some quick returns and sell out before those businesses and bonds fail.Now if the Fed stops buying all those bonds and lets interest rates rise, new bubbles will burst in the housing and stock markets, mortgages will again fail and bankruptcy courts will be jammed by failing enterprises. Meanwhile, healthy growth does not happen. Since January, the economy has added 815,000 part-time positions but only about 35,000 more Americans report finding full-time work. The Fed's easy money policies won't fix much, but the central bank can't stop printing money lest the economy collapse altogether. Follow @PMorici1 This article was written by an independent contributor, separate from TheStreet's regular news coverage.
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