What is the economic rationale for allowing the Fed to create trillions of dollars out of thin air

[SimpleTrades]

Today as an experiment I decided to jump on a thread full of unsubstantiated assertions and attempt to counter that with quantitative rigor, point out obvious logical fallacies, or appeal to common sense counterexamples. It was fun, although as you can see clearly a “whack a mole” game. Post after post was debunked with actual data, with generally only “you’re wrong because I think you are” style responses if any, only to have another poster come on with an even weaker assertion, completely ignoring the fate of the previous posters. I’d love to do a study of this type of thing, it really does show that the more evidence against an unsubstantiated position is pointed out, the more those advocating for it dig in their heels, which is a nonobvious response to me at least.
This concludes my experiment, I’ll leave you all to wilder and even less fact based conspiracy theories and only hope that you take my advice to take even one macro course. Thanks for the fun day though!

Boo Hoo! Come on, Sig, did you really think you could convert a bunch of lunatics? Please, don't jump in front of a large boulder tumbling down a hill hoping to stop it. You're going to get yourself killed! Same idea applies to trading, by the way.

Anyhow, I actually agree with you, but .....

 

[achilles28]

Good post. Agree on all counts and the "rub" is that the reflation of asset prices has major demographic implications. Two equity bubble/busts (2000 & 08) have also put a dent into the boomer's retirement plans (i.e. the typical entry/exit into the workforce that existed in prior generations). Clearly ZIRP isn't doing anybody favors either...Even if you are some CB lackey (like a few of the knobs on this thread), it would be hard to argue that the benefits of ZIRP outweigh the cons, in aggregate. It was intended, or so they said, to be an "emergency measure" (i.e. rates would be normalized in a reasonable measure of time...not 84 months!).

Anyhow, you know all of this, but I do get tired of the usual hacks who pretend that there is some arcane rationale for all of this that the "peons" cannot comprehend.

lol yup, us lowly peons and the great wisdom of central bankers (who created these bubbles to begin with!!!). Fucking morons. Nobody talks about offshoring and the explosion in private and public debt in America. They coincide perfectly. The eggheads cheerlead FED intervention and totally ignore the seminal work of Reinhart and Rogoff (two Harvard eggheads that concluded America is headed for a debt implosion). Greece and EU periphery mean nothing to them. We're Japan, afterall (even though America is a net debtor. And Japan, a net creditor). This is all nonsense and meanderings of the 'lunatic fringe' who just can't grasp why printing 4.7 Trillion dollars and spending that into the economy is somehow a clear signal that the economy is....'strong'?!?! Every metric - full-time employment, living standards, wage growth, GDP, labor force participation rate, public debt - its all bad. We'll see how strong this economy is when the FED continues to tighten its balance sheet and raise rates. That's a real problem and I doubt they even raise past a token 200 basis points. I don't even participate in these debates anymore. It's futile. It's like debating freedom with a Rhino Republican or establishment Democrat. Useless. All we can do is prepare for the worst, and make haste when it arrives, unfortunately.