A sound, stable currency is an essential component to a free market. When a currency is manipulated it can drastically upset the natural balance within a marketplace.
When money is cheap (i.e. artificially low interest rates combined with Fed pumping new money into system) it leads to malinvestment.
Consumers buy things they wouldn't normally buy. Companies invest in projects they normally wouldn't invest in.
There is an initial "boom" (i.e. asset prices rise) that comes from people spending the easy money. But it can't last because the spending didn't come from savings or underlying productivity increases. It came from artificial stimulus.
I'm glossing over a lot of points here, but it's called "business cycle theory" if you care to investigate.
A sound, stable currency is an essential component to a free market. When a currency is manipulated it can drastically upset the natural balance within a marketplace.
When money is cheap (i.e. artificially low interest rates combined with Fed pumping new money into system) it leads to malinvestment.
Consumers buy things they wouldn't normally buy. Companies invest in projects they normally wouldn't invest in.
There is an initial "boom" (i.e. asset prices rise) that comes from people spending the easy money. But it can't last because the spending didn't come from savings or underlying productivity increases. It came from artificial stimulus.
I'm glossing over a lot of points here, but it's called "business cycle theory" if you care to investigate.