My policy primer, Common Cents, explains why the interest rate(s) is the most important price in a free market economy. Distorting it has far-reaching consequences, as David Stockman explains in this post from his blog, Contra Corner, from which I quote below:
The single most important price in all of capitalism is the money market interest rate. That is the price of poker in the Wall Street casino; it is the cost of production for the carry traders and gamblers who provide the marginal “bid” for risk assets.
By supplanting free market price discovery with an artificially pegged price of zero, the Fed is unleashing the furies of greed and reckless speculation in the financial system once again. So it has truly become a serial bubble machine headed by a babbler who apparently believes in make pretend.
Read full article here.