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Should Fed invest in stocks, bonds?


Friday, October 14, 2016

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Janet Yellen

Kelly Cunningham Kelly Cunningham, National University System

NO: The Fed does not recognize their unconventional policy actions are causing global stagnation. The U.S. economy has lagged since the financial crisis of 2008 because of distortions the Fed policies inflict on Treasury bond and money markets. The specter of more broadly intervening in capital markets would keep zombie companies in business, cause more deflation, and reduce profitability of well-run competitors. Extending credit to selected businesses confers preferential creditworthiness, amplifies distortions, and be dangerously fraudulent.