Today the Fed Open Market Committee declared it would push the free market further out of balance.Thanks to Fed actions and to problems in Europe, we are at historically low long-term interest rates; the yield on 10-year T-Bills is down to 1.64%. As if this is not enough, the FED pledged to extend the TWIST program using $267 billion over the next 6 months to exchange short term bonds for long-term bonds, to force long term interest rates still lower. The rationale? To stimulate the economy.
Steroids hype short-term performance with bad long-term consequences.
The low-rate drug is not good for the economy; the side effects in the long-term are terrible; but the Fed keeps increasing the dose.