SCHEERPOST, Released on 10/21/22
*The interview begins at 4:23
“The Fed has been raising interest rates in a very accelerated way. Why? Ostensibly, to fight inflation, which mostly it can’t control oil and food type prices. What it can control is the cost to real people of borrowing. That cost has now increased or doubled since March for actual real people who don’t have access to tons of cheap money to, for example, afford mortgages, which is one of the reasons they’re staying in rents, which is one of the reason the rents are going so high. So, all of these incidents, whether it’s the Fed inflating markets by inflating its balance sheet, or it keeps its balance sheet as high as it was, but it increases rates to tighten the availability of money for real people, ultimately still helps the markets relative to the real economy. Right now, it’s happening in real time. I believe the Fed’s going to ultimately inflate its balance sheet again when the economy ‘gets bad enough’ or Wall Street more particularly asks for more help, which it will, because its loans are starting to deteriorate again because people cannot afford to pay these rates. But in the meantime, we are in the middle of this permanently distorted environment.”
Nomi Prins is an American author, journalist, and Senior Fellow at Demos. She has worked as a managing director at Goldman-Sachs and as a Senior Managing Director at Bear Stearns, as well as having worked as a senior strategist at Lehman Brothers and analyst at the Chase Manhattan Bank. Prins is known for her books All the Presidents’ Bankers: The Hidden Alliances that Drive American Power, Collusion: How Central Bankers Rigged the World and Permanent Distortion: How the Financial Markets Abandoned the Real Economy Forever.