Ronald Reagan is surely rolling in his grave. He is credited for much that he didn’t actually accomplish on the economic front, but his most singular real victory—-decisive repudiation of the Keynesian macro-economic policy model that had produced stagflationary havoc for more than a decade—-overshadows all his fiscal failures and the urban legend that he actually tamed Big Government.
Needless to say, however, that 35-year ago repudiation has now been itself completely repudiated by the keynesian apparatchiks who presently rule the Eccles Building. Yesterday Janet Yellen was at it again, displaying outright contempt for the Gipper’s crowning achievement.
To that end, she announced that interest rates will remain pegged at zero until at least September. That is, the Fed will continue to dispense free money to Wall Street gamblers for what will now be 80 months running.
This lunacy is purportedly necessary to accommodate economic recovery, even if it does fuel the fires of financial speculation. Indeed, one of the Fed’s faithful MSM flaks, Greg Ip of the Wall Street Journal, said as much in a hot off the press column obviously written in the Eccles Building:
There is certainly ample evidence that low rates have fueled speculation, such as higher home and stock prices……This, however, is not automatically a reason to raise rates. The Fed must weigh the benefits of lower unemployment against the probability and potential severity of a (financial) crisis later.
Indeed. This kind