New Economic Perspectives has the post Bullet-Pointing the Big Bank Bamboozlement by Dan Kervick.  I have said before on this blog that there are usually many economic forces pulling on the economy, but the trick is to figure out what forces are dominating at any given time and what forces are so small that they can be ignored for the time being.

I liked this article because it mentioned a number of forces that I had never considered.  I’ll quote a few of the bullet points on only the topic of low interest rates.  For the rest, you’ll have to read the article itself.

But at this point, does anybody really know what central bank policy would actually be most conducive to getting back to trend growth? Let’s run it down, PowerPoint style, shall we?

• Are Fed asset purchases holding long-term interest rates down? Certainly.
• Are those low rates leading to a healthy situation in the housing market, or to another dangerous bubble?  An open question.
• Are asset purchases injecting money into the bank accounts of the affluent and large financial institutions? Yes.
• Are asset purchases also draining interest income from the economy? Yes.
• Are asset purchases contributing to a wealth effect by boosting the prices of equities? Possibly.
• Are asset purchases contributing to a negative wealth effect by suppressing the interest earnings of retirement savings and other long-term assets? Possibly.

I knew I was going to make a post about these ideas because of the reasons mentioned above even before I saw this last throw-away bullet point.

Oh, and one other random point to note:

• Is Lawrence Summers, a crony capitalist insider and a virtual poster boys for everything we have done wrong in America over the past 30 years, a leading candidate to take over the central bank? Yes.