Who really controls the US economy?

Investors wait with bated breath to see what the Fed does next. But how much do their rate decisions really influence the US economy? Perhaps not as much as the whims of the US consumer or the forces of globalisation.

The Fed is no longer in control of this economy (not that it ever really was in the first place). The U.S. consumer is in control (in conjunction with global wage arbitrage and other global factors, such as foreigners being willing to finance our debt, and at what interest rates). Simply put, if people decide to stop buying houses, there is nothing the Fed can do to make them. The Fed can encourage, but not force, speculation.

The US economy: two myths

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