Financial repression, he admitted, yes, this was neither a mistake nor an unlucky coincidence. It had always been an intentional provocation, the occurrence of ridiculously low interest rates and the negative effects these have on savers. The difference was that Mr. Kocherlakota would never speak so explicitly in public. Like corruption, cowardice comes in many forms.
The President of the Fed’s Minneapolis branch, Narayana Kocherlakota’s tenure at the FOMC was as the typical Economist. In times of trouble, the master neo-Keynesian playbook tells policymakers they had better disadvantage grandparents; discourage saving in any way possible. The fact this is harmful to their financial comfort really is the whole point.
“MR. KOCHERLAKOTA. The comment that I’m tempted to make, but which I have not made yet in public, is that this is actually a feature, not a bug. [Laughter] We’re trying to get them to consume, as opposed to saving, to spend money on their grandkids and lend to that promising young entrepreneur down the street, as opposed to holding money, and so this actually would be a sign of the program working.”
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