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The federal reserve basically has only 2 tools to govern the economy with: the money supply and interest rates. When the interest rate goes to zero, and the economy no longer responds, that is a condition known as the “Liquidity Trap”. We are now in the Liquidity Trap, and the Fed is basically in a position where it no longer stimulate the depressed economy. At this point, the government is supposed to step in and start building roads and infrastructure, but they don’t because present day Calvin-Coolidge/Herbert-Hoover’s (like Paul Ryan) have the idea that we should pay off the debt in the middle of a depression. That’ll surely fix the economy – NOT. And it didn’t fix it in the Coolidge/Hoover days either.
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The Consumer Financial Protection Bureau said that Castle &Cooke Mortgage LLC, used quarterly bonuses since 2011 toencourage its loan officers to give consumers mortgages withhigher interest rates, violating federal regulations.
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The risks come from building a system of credit largely out of view of regulators and also one without a control mechanism to assess if borrowers are even credit worthy. China, for example, has never had a corporate bond default, and analysts question whether risk is being priced appropriately.
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