Article Review #1

When I wasn't spending time figuring out which thesaurus David Stockman used to make himself sound both obnoxiously intelligent and unquestionably biased, I read between the lines and learned a little bit about modern-day economics. Basically, the article examines the fault in the Goldman Sachs Financial Conditions Index, the lowering of interest rates, the Federal Reserve's mass printing of money, the lack of non-theoretical proof of economic growth, and the (non) effect of federal stimulus on household borrowing and spending. Stockman's main argument throughout the article is against the "Keynesian Chorus", who claims that federal monetary policy as of late has been too restrictive. Stockman claims that regardless of what 'real' interest rate (negative but still too tight) a corporate financial executive may have concocted, that thought never crosses the mind of any real-world borrowers. What they do think about, however, is how much debt they can afford to carry and their potential penalties based on their credit histories. The result of that thinking? Even though interest rates dropped to 0% in the wake of the recession, household debt has remained flat and has in fact decreased since 2008. What does that mean? All the federal monetary stimulus had no effect on household spending and borrowing. Stockman says all this to break down his main point at the end of the article, explaining the inflationary impact the lower rates have had in the "canyons of Wall Street". Stockman disputes that the interest rates have fueled the "third and greatest financial bubble of this century", going on to argue that if the government continues to heed the advice of the people who have let this bubble build up to this point, it will burst. My main question is, where is Stockman's evidence? Is it merely a process of elimination, because the growth hasn't been seen in the business or household sectors? Overall I'd rate this article 3/3 because Stockman's obtrusive language made it a difficult read on the first time through, but as I re-read it became easier to understand.