The spread between short ad long term rates
Regarding this chart, Brad asks:
- Question: Why have a Fed at all? Why this island of central planning in the middle of the economy? Why not just let the market take care of interest rates?
Well, he asks a loaded question, let's ask instead why do we have a centralized Fed?
The answer is we don't, we can decentralize the Fed and still have socialist banking. The crunch between the short and the long term reflects the central Fed problem of dealing with variant regional economies that react differently to Fed actions.
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