經濟,財務,統計學,數理科學與政治評論

Dear American people:

  The monetary policy has its limitation on the structural change of economy. The same principle applies to the US Fed.

   The US Fed on raising rate may have a longer-term time-lag effect this time. People would suggest that if the Fed is determined to raise rate, then the rate raising should be earlier rather than later. The bond market reaction to the first rate raising would be much slower than expected because everyone holds the US Treasuries and no one wants to lose money. But it should not stop the determination of Fed's policy maker on the base-rate nomalization because we may find that the inflation comes to the US in an unexpected way.

  The ultra-low rate envorinment is bad for US economy lately because we don't see any solid production increasing in the US. A figure shows that there are below 50% US families have their own houses after the 2008's crisis. It seems to suggest that even the Fed raises the base rate more than half a percent, it may not have some big impact to ordinary American people as used to be. On the contrary, it may push the interest rate of US back to its normal level. Those retirees in the US who depend on interst rate payments from the bank or the Treasuries may feel happier. The ultra-low rate doesn't give any real meaning to the US except those speculative avtivities. As the time comes and the Fed prepares for nothing, it will be a hard time for the decision maker to realize that the inflation does come for which nobody is well prepared.

  The history of ultra-loosing quantitative easing of Japan lets us know that those stronger international companies of Japan would become even stronger after those QEs. We already see the same thing happen on big US corporations. But it doesn't make Japanese happier or feel financial safer in those years of Japan's QE because the structure of Japan economy doesn't change accordingly. The property price of Japan goes down more than two decades. It may even make the thing worse for those corporations which should go bankrupt but not. The ultra-loose monetary policy is bad to the economy because the financial market may lose its self-selective ability to make those viables survive and desert those malfunctions.

  The Fed should have some deep thoughts about where the US economy should go. The USA still has advanced technologies and well-educated people. The US should change its way on some big innovations. People all around the world needs clean drinkable water. People all around the world needs foods away from starvation. In the near future, we may even see those issues happen in the USA if the clean water issue is neglected and the world's weather is unpredictable. It is a reason why people believes the bad weather and short of clean drinkable water may push the food price to go up. It may eventually push up the inflation rate all around the world in an unexpected way which includes the USA.

  Dear American fellows, I remind you several times before. The reason to use the QE is to let every American people have a job to live upon rather than to let those sepculators make money from messing up financial markets. But we still do not see the thing happen. A lot of American people give up to find a job. The labor participation rate is well below the average of history. If the QE has its limitation, then we should stop using QEs anymore. The history of Japanese QE is a disaster that other nations should not follow. The structural change of economy should be the first priority for the US if American people still want the Fed to keep the rate lower enough for a longer period. The USA should come out with new industries. American people should think hard about the issue of what the world needs in the following decades. We will have a lot of people live on the earth. We will need a lot of clean drinkable water and food to feed those people. What American people can do is to figure out how to resolve those issues and turn those innovations into gold.

  American people have to forget the old-day glory. Those days are gone. People all around the world need something new except the internet-related things. People need foods to survive. People need some basic elements to live on such as food. Higher technology is useless if we have no food to eat. Advanced fancy things become worthless if we have no clean water to drink. Go back to the basic and come out with something new is what American people should help. The world needs a brand-new USA with new structure of economy which cares the basic need of human race.

  Now American people still face the not-enough savings problem which is one of factors that could not get every American poeple have a job. The US uses the QE to supplant the saving is obvious but it could not go on forever. The living standard of USA is much higher than everyone knows. It is a fact that we could not ignore. All those things seems to remind us the limitation of US Fed's policy. The fundamental issue around the real employment of USA goes to the savings and living standard. Then the easy soloution seems to be a cheaper US dollar. But if it is not the case, then the structural change of economy is another great solution.

  The structural change of economy may be an issue that is bounded by the Fed's monetary policy. The Fed should accomodate the US monetary policy back to its normal level instead keep it in the ultra-loose situation. A higher rate environment also have the effect to encourage people save more. Capital accumulation is an important thing to let all American people have a decent job eventually.