re: When do interest rates rise

quote:

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to my point, if cheap money was lent out like everyone thinks it was, then consumption and inflation would realize that.

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I think you have to look back at the financial crisis for context as to how cheap money has been lent out and used. The financial crisis wiped out the credit scores of a large amount of consumers, and as the effects of that crisis rippled through the rest of the economy, many people ended up losing their jobs. Both have strongly negative impacts on consumers getting loans, and that's not even considering people trying to rebuild their stock portfolios, mainly if they panic sold. So we're sitting on consumers who need time to recover before they start really taking advantage of low interest rates, and that could explain low CPI inflation, which by extension, leads to low PPI inflation.

So who has really been using cheap money? I'd say it's businesses and the smarter money - the top 10-20% of wealthy Americans. Businesses take advantage by buying back shares, issuing dividends, and acquiring other companies. Buybacks hide lower total earnings because people focus on EPS, and the buybacks and dividends increase the stock price. But none of those three purposes are really improving the economy like increased consumption would and are arguably hiding the results of weak consumption. As for the smarter money, they enjoyed the stock market climb and took advantage of rates by buying the cheap real estate the crisis produced. The rich got richer because they're smarter, not because of greed. But you can't expect a Bernie Sanders follower to believe that because it challenges how much they really know about money, markets, etc (which they really know quite little, but hubris is a powerful thing).