The Problems are the Path: Has the FED broken the Housing Market?
An interesting subject was posed recently by El-Erian, Chief Economic Advisor for Allianz. He states that The FED has destroyed the housing market in both supply and demand. I have very little to support the actions of the FED as compared to similar events in economic history. The old adage, "Economic advances don't die of old age; they're murdered by the Federal Reserve", is not working now. FED actions in raising interest rates that will eventually affect force jobs to create layoffs, then people stop buying and in general we drop into a recession. Homes are foreclosed, earnings stop, savings are eliminated. The last time this worked in a resilient economy Chairman Volker took interest rates to 14.5%. We had a recession, foreclosures, bank failures, and large unemployment numbers added to a bear market in the stock market and the bond market. This was very effective FED action for one reason, Savings were eliminated by the bear market in stocks and bonds and