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Politics : President Barack Obama
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To: Wharf Rat who wrote (144872)8/4/2014 7:38:26 PM
From: RetiredNow  Read Replies (1) of 149317
 
You don't believe our economy is centrally planned? Consider this. All assets and contracts are priced in dollars, yes? Prices are determined by supply, demand, and a risk premium, yes? How is that risk premium calculated? How are future discounted cash flows discounted? All of that is predicated on interest rates. In a fiat currency economy, the currency is based on debt and debt is priced using interest rates. So interest rates ARE the price of money. Our Fed moves interest rates around at whim and prints money at whim. They are quite literally manipulating the key lever of our economy to produce their desired results. This is the very definition of a centrally planned economy.

A free market capitalism would only operate efficiently if interest rates were free to float based on supply and demand and the market's assessment of the risk of holding US Treasuries. Then we'd have a market based economy, instead of a centrally planned one. At the root of many of the distortions that are destroying our economy is a very sick dollar-debt based economy with interest rates that are 100% distorted and manipulated and do not measure risk properly. Everything else in our economy is predicated on that and therefore we have a highly distorted and inefficient economy, with low growth and lingering malaise. Bad debts and speculation are not allowed to clear. Savers are punished and bad actors are rewarded. No wonder our economy is such a mess and the government then feels to give out welfare to distract everyone from the pain of their own making.
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