Finally the Moment of Clarity

[DC Al Fine]

One small hole. Some of those "it goes to existing assets" listed actually would create production. For example say I'm a gold bug and take a chunk of stimulus money and buy gold. If enough people do this, the price of gold will rise. The high gold price means the mining companies will increase production, so they go out and purchase more equipment. The equipment manufacturer hires more workers to keep up with demand, purchase more steel and so on and so forth.

[DC Al Fine]

Excellent response, and I totally agree as I am no Keynesian. Hayek and other Austrians spoke of actual economic growth coming about because of real savings, which are discouraged under current monetary policy. There is next to no incentive to save much of anything at all, with plenty of incentives against.

Even though the demand for credit is greatly reduced, I still believe that interest rates are artificially low. If interest rates are not allowed to float, the Fed should raise interest rates. Alas, the odds of that happening are slim and none.

[DC Al Fine]

You do realise that the rich don't fill their swimming pools with money, don't you? Savings are ultimately invested, either directly though stocks/bonds or indirectly when the bank loans out the funds in your account. Slashing interest rates cuts out this source of investment in the economy while creating speculative bubbles fuelled with malinvestment.

Economic leftists have a different conception of justice. Our economic heores are not idlers that live off past capital, but workers who earn current income. Hence inflation that includes income inflation and increases workers' incomes and reduces their debts is good. Hence low interest rates that allow them to borrow at the least cost to themselves is good.

Sure, encouraging people to rack up low cost debt is a great idea. It will help them purchase houses they otherwise couldn't afford. I'm sure there won't be any negative side effects to that /sarcasm