We all understand the damage done to savers by the Fed's super low interest rate "financial repression," but there is a directly related issue which receives no press, though seems far more important.
The tipoff is that we are not "borrowing from our children." Our children have no money to lend. Then where is the "borrowing" coming from?
It's coming out of the capital base which represents the repressed savings. For the middle class, savings is the key resource for economic growth. It is the only way one educates one's kids, obtains a down payment for a (now overpriced) house, saves to start a new business (restaurant, farm, machine shop, retailer, internet service business, etc.). The savage disincentives provided by financial repression are not only destroying the retirements of savers, it’s destroying the ability of the middle class to grow the economy (and of course, jobs).
The most obvious of these effects can be found in the first time home buyer statistic; it has collapsed.
Fed policy, while making the banking sector rich, is killing the economy; not expanding it.
One wonders if the academics at the Fed understand this, and are simply pressured to support the cheap Treasury and bank financing of the powerful interests, or are completely unaware of the logic that you cannot spend your way to wealth and you cannot borrow your way out of debt.