/biz/ - Business & Finance

>>30345216
>be you
>be newly appointed Federal Reserve Chairman Paul Volcker circa 1981
>job is to keep the economy growing at a slow but steady pace
>economy isn't doing too well because of your predecessors and (((OPEC)))
>realize that if you bought a bunch of government bonds, this would cause an artificial dip in interest rates, thus leading to an increase in spending, thus leading to an economic boom
>problem is is that this is financed by printing money
>fed has done this before in very mild amounts
>except you don't want to pussyfoot around so you lower the interest rates by a lot, for a long time
>economy is doing great all throughout the 80's
>this creates a problem: government and corporations have become reliant on cheap loans
>whenever their loans become due, they just refinance them into new loans since you keep lowering the interest rate
>be Paul Volcker's successors Alan Greenspan, Ben Bernanke, and Janet Yellen
>realize the hole that has been dug
>try to raise interest rates
>market collapses every single time because investors realize that if corporations are forced to actually pay back their loans, they'll go bankrupt
>so you choose to keep kicking the can down the road
>be current Chairman Jerome Powell
>realize the entire system is fucked but there's no point fighting it so might as well go all in
>aggressively, but hopefully sustainably, keep rates low
>whoops: coronavirus causes the economy to crash
>have to lower yields to basically zero
>no one wants to finance a loan with 0% return
>the only buyer left is the Federal Reserve
>except even though you're printing $100 billion a month, it isn't enough to suppress the rates
>now on verge of implementing yield curve control, where you commit to financing longer term loans to hopefully inject short term liquidity no matter how much it costs
>will probably only delay the inevitable crash by a few months at best, as well as causing tons of inflation, but hey, at least line kept going up