Originally Posted by
Hoop
Yes Ananda...the monetary policy way :)...The Economy has recovered years ago..The leading sectors have been booming for years now and they just have to stay booming for several years yet to allow that trickle down effect to enter into the consumers pocket which is theoretically always the lagging sector of any Economy..
Often by the time the consumers finally get the tickle down rewards the leading sectors of the economy have past their peak and "black clouds" are starting to appear...so one could say that the economy will never be exactly right, or at best, right for a brief period in time only...
We have see different disciplines (usually political) trying to "cheat the cycle" by kick starting an economy by prematurely throwing money into the lagging end, it may give a quick short term consumer boost but that method has proved to produce a longer term "pay the piper" stifling effect. Australia is presently a good example of that with the money spent from its mining boom.. ..
Remember that in USA the destructive GFC evaporated a huge amount of public money..life savings, Real Estate, 401K funds etc..So the Monetary way is that the USA will need an extra long boom to replenish the public's financial hole and the FED is currently manipulating the hell out of the leading sectors to keep that boom running at full steam...
So far you have to give the FED 10 out of 10 for bubble management..It has so far created and is achieving its goals with artificial adjustments to minimising those associated risks....
Theoretically to prevent an economic collapse one creates an artificial bubble(s) (e.g very cheap credit)...and, I read somewhere in a past FED report that Bubble management can become hard to control if continued for too long as risk becomes harder to contain.
I have this feeling the FED never expected this to take so long..
I would love to go back in time to 2009 and ask Uncle Ben "how long does the FED expect it would be before consumer spending reached it's peak" (full economic cycle)..Would his answer been, "before 2014" ?