What came first, low wages and uber high prices or perpetually low interest rates?
I’m not exactly sure of your thesis.
Lower wages (inflation adjusted) for working folks started in the 80’s with decline of unions and the rise of globalization.
Truly deranged low interest rate manipulation started with Greenspan in the early 90’s.
There seems to be an implied thesis in your statement that we can simply choose to hold interest rates at near zero forever without any negative repercussions. That is not true. How long can you hold your breath. A minute? Forever? There is a natural level of interest rate that balances out increases in GPD, population growth, economic activity, availability of resources, etc. You can deviate for that natural equilibrium for a limited period of time to nudge the economy in the short term, but you can’t simply peg it at a number out of balance forever without the negative effects compounding until an explosion occurs.
Another implied thesis seems to be you think artificially low interest rates benefit working folks. It doesn't really. It’s like going on a spending binge with a new credit card. It’s great fun for a little while, but eventually that bill arrives in the mail and the fun is over. Artificially inflated asset prices like stocks and real estate don’t really help regular folks. They really help the 10% of the population that own 90% of those assets, and that ain’t regular folks.
Young families who are just starting out have been totally priced out of the housing market over the last couple of years and housing prices have spiraled out of control in many areas. It's turning whole generations into a population of permanent renters. Apts aren't a great way to raise a family.
Young workers starting out saving for retirement and beginning to invest over the next are about to get seriously screwed. After the market crashes and take a decade to get back to last Nov price levels will be carving out a big chunk of time out of their preparation for their retirement. If they are young enough they will have some time to recover, but they will have lost ground and been put behind the curve. And this is the same generation that probably had their careers derailed and delayed by the GFC.
Regular folks who are retired and living on fixed income get terribly screwed by rising inflation. And worse, cheap money distorted the financial markets such that retirees, pension funds have been slowly squeezed for yield such that they have been forced out of safer investments like bonds into higher risk assets like equities just to be able to generate their needed return. These investors should not be anywhere near that level of risk, but TINA (There is No Alternative) and excessively low interest rates made safer investment sources unsustainable. This is going to cause MASSIVE societal problems when the music stops and these investors are caught still holding the bag.
Both the 2001 and 2008 crashes were the result of too loose money policy for too many years. Those crashes are not in the interest of regular folks. The next one is probably going to be worse than those two. I think you’ll find the third economic collapse do to loose money derangement to be very painful for regular folks.
