You know what happens when fire suppression policies limit forest fires: deadwood piles up and all the trees killed by bark beetles are awaiting a spark to ignite. Sure enough, a random lightning strike provides the ignition, and the entire forest is consumed in an out-of-control conflagration made inevitable by the policy of suppressing fires as "bad" for lumber companies and tourism, i.e. the politically influential.
This is a remarkably apt analogy for the central banks' policy of suppressing business cycle recessions that burn down dead zombie corporations and all the deadwood suppressing new growth.
The Yellowstone Analogy and The Crisis of Neoliberal Capitalism (May 18, 2009)
No Recession Ever Again? The Yellowstone Analogy (November 8, 2019)
If you're an insider using Federal Reserve "free money for financiers" to milk your zombie corporation, you love the Fed's suppression of actual capitalism. Fed free money enable you to continue to borrow cheaply and buy back your zombie company's shares, enriching insiders even though the company doesn't even earn enough to service its ballooning debts.
If you're not yet aware of the ballooning number of zombie companies, please read: Welcome To The Zombie Global Economy.
Recall that free-market capitalism's business cycle of over-investment and excessive risk-taking must be followed by a reduction in debt, the liquidation of bad loans and excess inventory, limiting exposure to risk, etc.--in other words, a fast-burning forest fire which incinerates all the deadwood, clearing space for the next generation of growth.
Some seeds will only open if exposed to heat. If the Fed makes sure there's never any risk of fire touching too big to fail/jail companies, cartels, monopolies and the soaring number of zombie corporations, then the seeds of real growth can't possibly open.
Welcome to the hopeless result of Fed manipulation: stagnation, soaring inequality and rampant corruption. Fed manipulation and widespread corruption are not separate dynamics: Fed manipulation--distributing trillions of dollars to those at the apex of the wealth-power pyramid--has fueled corruption by giving the most sociopathic, greediest few the means to buy political protection of their monopoly/cartel (Big Tech, Big Pharma, Big Ag, Big Defense, and so on) by influencing narratives (buying up the media), regulators and elected officials.
There is no way America would be as corrupt as it now is if the Fed hadn't provided trillions of dollars to those most anxious to corrupt every institution that might limit their greed and power. If money wasn't free, the predators, parasites, zombies and monopolists couldn't borrow such enormous sums to jack up their share price and buy political influence to protect their winnings.
The Fed's policy of permanent, expanding manipulation has picked the winners in our economy--the predators, parasites, zombies and monopolists who use Fed free money to strangle competition, eliminate transparency and corrupt anything that might represent the public interest or the common good, because these are anathema to the predators, parasites, zombies and monopolists.
The Fed has also picked the losers--the bottom 99%, and especially the bottom 90%, as these charts make abundantly clear. Have you looked at what you earned in interest on your nestegg? $2? This is the perversity of the Fed's incentives: to even hope to keep up with real-world inflation, everyone must sink their savings into dead trees that are just awaiting a spark to burn to the ground.
Some readers tell me that they feel depressed after reading my blog posts. Well cheer up, all we need to do is to let the Fed's manipulated, corrupt dead forest burn down. Once all the corruption and deadwood that the Fed has protected from market forces (i.e. competition and transparency) and any effort to promote the public interest and the common good burns down, then hope and new enterprises will finally have the open ground and sunlight to germinate and thrive.
Wake up, America, and see the Fed for what it really is: a totalitarian tool of kleptocracy.
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