Only one kind of person does not like the Fed, the big saver. Others should ignore the media and enjoy what the Fed did for our country.
As everyone should know, so far the Fed dumps as much as possible money currency into the market circulation including through the banks, stock market, treasury back backs. That could cause many outcomes. There are few things could and expect to be happen in the future:
- Inflation. Many people think that inflation is bad, actually, if you are business owners, you know that inflation is great environment to do business because you able to sell your stuff more expansive. The revenues and the margins will go up at the same time. For example, if you own a candy store, you bought the candy for $0.50 and resell it for $0.75. Then you make $0.25 for profit. Because of the inflation, you able to sell the same candy for $1.00. Then you make $0.50 for the same candy.
- As everyone know that our government has more than $15 trillions of debt. Most of this debt is owned by the foreign governments. We need to pay them back in some ways. Usually, in order to pay off the personal debt, a person needs to work hard to earn some money to pay off the debt. However, the Fed prints the money to pay off the debt. As American citizen you should not complain about this.
- Since the debt only has fixed value and very low fixed interest income every year, once a lot of paper money is printed, the value of debt become lower, so that it is easier to pay off in the future inflation environment.
- Inflation is bad for the savers too, especially for the big savers. Who are the big savers? Of course not a regular person with a few thousands in the money market account. The big savers are corporations with billions of cash in their accounts. With almost 0% gain per year, these companies will be forced to invest their cash to generate a better return. Otherwise, the money will take away by the printing process a little by little. Either this money will be used to improve their companies or offer new services; consequently, more people will be hired for expansions. Unemployed people should be happy and not complain about the Fed too.
- The pension funds also benefit from this low rate environment. The super riches will not put the money on the bonds anymore, and keep their money in the stock market which the pension funds held most of value. The baby boomer generations are closed to the retirement ages. The government cannot afford to deal the shortage of the pension funds. As long as the person funds with the money to pay their obligations, the baby boomers should not complain about it.