If the Fed doesn't pump in artificial value by printing money and zero interest rate, how does everything else rise in value?
If the Fed doesn't pump in artificial value by printing money and zero interest rate, how does everything else rise in value?
Value is subjective and dependant upon supply/demand. Also, printing more money reduces it's value (see supply/demand), although feds do not simply print more, it's based on the value of gold (see supply/demand). Notice a pattern? With regard to zero interest: are you talking about the borrower or the investor?
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Ok more context.
Gold/BTC people rightfully complain about government everywhere devaluing currencies, robbing people via inflation.
They rejoice, again rightfully, when borrowing interest rates are kept low, capital starts flowing their way. Same goes for emerging markets, etc.
Now if the Feds had kept interest rates "healthy", not print money (QE), how else would your favorite assets gain in dollar value?
I don't think there is any simple answer.
However, I feel that raising federal interest rates would help improve the financial positions of investors and savers (raise value of monetary assets), but would reduce spending which would temporarily slow the economy and initially lower our physical property assets.
It seems to me that poeple often confuse status for value, with low interest rates being the facilitator for building their status/value in society.
What I think what we, individually, should to do is slow our spending, reduce our debt, and increase saving and/or investments.