That's only true if the Fed's hand isn't forced and the QE equation can remain the same in regards to both the results they get per dollar of QE and the inflation they cause per dollar of QE.
However that's not how it works. The Fed is in a downward spiral scenario, in which their policies have ever less of a positive impact and ever greater of a negative impact, and that's what arbitrarily low interest rates also function based on: the longer you hold them low below absolute optimal, the greater the damage as a result at an accelerating rate.
The cheap money party is very likely to destroy itself in a way that is both hard for the Fed to predict and control. Just like it did the prior two times the Fed made the mistake of unleashing a wave of cheap money. You can read their minutes and speeches, they were so oblivious they (supposedly) had no idea the real estate bubble was underway or about to implode (true for both Greenspan and Bernanke).
What ends the cheap money is the asset bubbles get so large their downside poses a threat to the integrity of the entire economy. They have to raise interest rates to stop the extreme asset bubbles that cheap money causes. We're at that line right now, which is why they keep pushing headlines about raising interest rates, it's meant to artificially hold down asset prices without the Fed having to actually raise rates.
The stock market is already approaching the highest valuation it has ever had in a 'bull market' outside of the dotcom era and maybe 1929x. Real estate has almost entirely recovered, and in many markets is now higher than the peak of the bubble of 2005/06.
You throw another 30% gain on the stock market, and 20% on the real estate market, with continued mediocre earnings growth and 1% to 2% GDP growth, with little to no wage growth or full-time employment growth, while Europe is in a continuing depression, Japan is in a recession, and China is melting toward zero real growth, and you're priming for a crash across numerous asset classes that will send the US into a true depression.
15 years of horrifically bad monetary policy has yet to be paid for. They keep trying to prevent recessions from happening. The price for that bad behavior will keep climbing day by day.
If they don't raise rates, they crash the economy as asset bubbles become increasingly unsustainable. And even though the Fed will attempt to keep the cost of money low in that scenario, nobody will be able to get access to that cheap money (ala 2009/2010 but far worse).
How long has money been cheap in Japan? 30 years? we have some of the same factors at work in the U.S. not the same situation obviously, but fundamentally, we have a relatively slow growing economy which does not generate a lot of inflationary pressures and my guess, the Fed will keep rates relatively low for a long time.
However that's not how it works. The Fed is in a downward spiral scenario, in which their policies have ever less of a positive impact and ever greater of a negative impact, and that's what arbitrarily low interest rates also function based on: the longer you hold them low below absolute optimal, the greater the damage as a result at an accelerating rate.
The cheap money party is very likely to destroy itself in a way that is both hard for the Fed to predict and control. Just like it did the prior two times the Fed made the mistake of unleashing a wave of cheap money. You can read their minutes and speeches, they were so oblivious they (supposedly) had no idea the real estate bubble was underway or about to implode (true for both Greenspan and Bernanke).
What ends the cheap money is the asset bubbles get so large their downside poses a threat to the integrity of the entire economy. They have to raise interest rates to stop the extreme asset bubbles that cheap money causes. We're at that line right now, which is why they keep pushing headlines about raising interest rates, it's meant to artificially hold down asset prices without the Fed having to actually raise rates.
The stock market is already approaching the highest valuation it has ever had in a 'bull market' outside of the dotcom era and maybe 1929x. Real estate has almost entirely recovered, and in many markets is now higher than the peak of the bubble of 2005/06.
You throw another 30% gain on the stock market, and 20% on the real estate market, with continued mediocre earnings growth and 1% to 2% GDP growth, with little to no wage growth or full-time employment growth, while Europe is in a continuing depression, Japan is in a recession, and China is melting toward zero real growth, and you're priming for a crash across numerous asset classes that will send the US into a true depression.
15 years of horrifically bad monetary policy has yet to be paid for. They keep trying to prevent recessions from happening. The price for that bad behavior will keep climbing day by day.
If they don't raise rates, they crash the economy as asset bubbles become increasingly unsustainable. And even though the Fed will attempt to keep the cost of money low in that scenario, nobody will be able to get access to that cheap money (ala 2009/2010 but far worse).