Contrary to Idiocratic belief, the Fed doesn't control long-term interest rates aka. deflation expectations. Walmart does...
ZH: Sept. 9, 2015
Stockman: The Fed's ZIRP (0%) Is An Incentive To Gamble
Right, except the Fed didn't create 0%, Corporations did. But you'll never hear Reagan-Acolyte Stockman say that, because to impugn corporations and Ponzi kapitalism is not allowed...
Post-WWII, the U.S. enjoyed a 20 year "peace dividend" which hit the brick wall of foreign competition in the mid-60s. The American Dream was in jeopardy. Fiscal deficits from Vietnam and Social Programs were causing a run on gold by other nations holding dollars.
Milton Friedman knew what to do so he advised Nixon to drop the gold standard which would allow the money supply to increase:
CPI Inflation (blue line) of course skyrocketed during the 1970s. Friedman needed deflation and he knew where to get it, so he advised Reagan to embrace "free trade" with countries having no labour or environmental standard. Red line is net exports aka. imbalance of trade:
The boneheads at the Fed were just along for the ride, a chimpanzee could have done their job. Scapegoats for corporate psychopaths and their acolytes.
CPI and Fed Funds Rate...
"If lower interest rates cause inflation, then why is inflation going down with interest rates? Duh...". Thirty-five years of non-stop bullshit visualized:
As described by none other than Yanis Varoufakis, Greek Finance Minister - the American Way was "tribute" from the rest of the world to the U.S. for using the dollar as reserve currency. Also known as seigniorage - profiting by printing money.
It was the "exceptional" payoff for World War 2.
Monetary expansion, made possible by the monetization of poverty, funded the Globalized corporate empire until it self-destructed.
Obliterated by that most basic and fundamental law Supply = Demand.