Contrary to nearly every headline you read about monetary policy these days, I believe it is quite possible the Fed Chairmen Ben Bernanke is performing quite well and much better than any of his recent predecessors. In fact, I think he is directing monetary policy with unprecedented precision and skill.
Maintaining artificially low interest rates or excessive money supply does permanent damage to economies in the medium and long-term because it delays creative destruction, the process of replacing low-return investments with higher-return investments. To help illustrate this point, I present the “Investment Opportunity Schedule” in Exhibit 1