Minneapolis Fed leader says low rates could bring signs of instability

  • Article by: JOSHUA ZUMBRUN , Bloomberg News
  • Updated: April 20, 2013 - 9:14 PM

President Narayana Kocherlakota of the Minneapolis Federal Reserve Bank said the central bank’s low interest-rate policies, though necessary, will probably generate signs of financial instability.

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Wally_99Apr. 20, 13 9:26 PM

These artificially low rates have already brought instability. In fact, the stock market is a bubble waiting to burst once rates go up. It is utterly and artificially propped up by these ridiculous rates.

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wickeywackeyApr. 20, 1310:20 PM

Google "UEMPMEAN", look at the St. Louis Fed's own graph and say there's a rosy future with a straight face. A 37 week average duration of unemployment??? More clueless Greenspan logic.

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theagonybhoApr. 21, 13 8:26 AM

Boy you cant pull on over on these guys, of course artificially low interest is going to cause financial instability, the feds meddling is going to come to roost very soon in housing and the markets.

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handsomepeteApr. 21, 13 8:33 AM

Want to talk instability? The Federal Reserve is printing $85 BILLION every month and using it to pump up securities values. The economy is in such bad shape thanks to constant demands for tax increases by you-know-who that the Fed felt the need to take this unprecedented step of artificially inflating stock market and other securities values. It's been doing this for almost 4 years now! And it has not helped one bit! Read this from October 2012: "(Federal Reserve) Chairman Ben S. Bernanke is increasingly aiming for gains in stock prices as the Federal Reserve reaches for new tools to spur the three-year recovery and reduce unemployment stuck above 8 percent. Bernanke, setting the stage for a third round of quantitative easing in an Aug. 31 speech in Jackson Hole, Wyoming, said the strategy works in part by boosting the prices of assets such as equities." Source: "Bernanke Seeks Gains for Stocks in Push for Jobs: Economy", Bloomberg.com, Oct 2, 2012. Stock market bubble, housing price bubble (again!), farm land price bubble--this policy is a DISASTER just waiting to pop!

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jd55604Apr. 21, 13 1:23 PM

The Fed is in way too deep now for them to just back out of this ill-advised strategy. Their balance sheets containing mortgage backed securities (toxic assets) have never been higher and total over 1.1 trillion$. How are they ever going to sell these things at face value in order to reduce their holdings? Who would buy them? Their strategy seems to be in keeping as much of this shadow housing inventory off of the market in hopes of triggering another artificial housing bubble which would allow them to dump some of these bad securities.

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e72521Apr. 25, 13 5:07 PM

Residential real estate is also getting very bubbly, and this time it's messing up the apartment rental market too. In a couple of more years there's going to be a glut of rentals, as well as houses. The gov't can't keep feeding this dragon forever, at some point it's going to snap back at you.

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