The Nuts & Bolts of Money Flow – Post 2008

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    From an Austrian perspective, it’s plane that our government is steering our economy into troubled waters. Anything the government ever does to the economy is artificial, and there has been an enormous amount of that. That much alone is all you really need to know, in order to realize that the table is being set for disaster. When anybody, including the US and other world governments goes up against Mother Nature,…… well, we’ve all seen this movie enough times before to know that Mother Nature always wins.
         But I’d like to get a better grip on the details of what’s actually going on – the nuts and bolts of the processes involved.
         I think the government began it’s intervention by artificially suppressing interest rates, holding them clear down near zero percent, known as Zero Interest Rate Policy (ZIRP). As far as I know, the only interest rate they target to control is the Fed Funds Rate. I’d like to have a better understanding of both sides of that. How does the Fed control the Fed Funds Rate, and then how does the Fed Funds Rate effect other rates, and the ecobomy?
         I’m not real clear about QE either. Is the Fed buying pre-owned government bonds, on the open market, or are they newly issued from the treasury? How does China fit into the picture, and isn’t the CPI greatly diminished because of the low multiplier? I think two things are wrong with reported inflation:
    In the second place, the CPI understates the rise in average consumer prices, and In the first place, rising average consumer prices is NOT inflation.
          I’ve learned a lot at the Mises Institute, but most of the material deals with the broad subject of economics, or even a narrower branch, in a general sense. I don’t think anyone is providing good enlightening coverage of the special state of affairs that has emerged in our modern times – the nuts & bolts of money flow, post 2008. Do you know of a good source where I could learn more on this subject? Or, maybe it would be a good topic for you to blog about???

    Sound Money Steve


    If you don’t receive a satisfactory answer soon here, I’d recommend you post this in the “Austrian Economics, Step by Step” forum. Dr. Herbener will probably have answers to your questions, but he may not regularly look at this section.

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