Is the Fed confused about how the economy works? Is the Fed confused about how the financial system works?
Probably not. There’s probably some other explanation altogether, after all, why would someone put gas in their radiator when the gas-tank is empty. That’s not going to provide fuel for the engine, is it? The same rule applies to stimulus. The only way stimulus can work is if its put where it’s needed. And we can now say with 100 percent certainty, that the Fed’s stimulus wasn’t put where it was needed which is why it hasn’t worked.
How do we know that?
Just take a look at GDP. Second Quarter GDP came in at a dismal 1.2 percent even though interest rates are still locked at near-zero and the Fed is still recycling the cash from maturing bonds into more government debt.