Fed admits it can’t fix the K shaped economy . .

Photo above - "we have met the enemy, and he is us." Did PBS and other home flipping shows help fuel the 2008 subprime mortgage crisis?

What the heck is the K shaped economy, and why is it the title of every bit of financial spam I’m getting? I googled "K" – there is no specific inventor of this term. K shaped means one part of the economy is rising while the other is falling. Economic inequality.

Trump is not responsible for the K shaped economy. It may have started when America began to recover from the Chinese Wuhan Military Virus Lab Bat Flu leak pandemic of 2020. If you mandate pandemic shutdowns for half the nation, then dole out $4 billion in stimulus money by increasing the national debt . . . well yes, there will be winners and losers. That’s the entire function of the US government. To circumvent the free market and create winners (and losers). Winners are then obligated to the politicians who helped them (theoretically).

CNN (link below) states the obvious. “The Fed admits it can’t fix an economic problem it helped create”. This is where CNN and the New York Times break ranks. The Times says we should look to the virus stimulus. CNN counterpunches by claiming low interest rates were making America a hellhole. Which news organization do you think has a better grasp of how money works? This is not a trick question.

CNN’s “K” premise is breathtakingly simple, and hilariously wrong on 2 points.

1 – Problem one: 20% of Americans still have mortgages with rates less than 3%, and they have no incentive to sell those homes and only to get saddled with a much higher 2025 rate. Buying and holding when you have an affordable living space is a sin now?

2 – Problem two: low mortgage rates meant only people with good credit scores and down payments could buy homes. But these requirements were enacted by congress after the 2008 subprime mortgage crisis. To make sure that only people with real down payments and credit scores were approved for mortgages – not millions poseurs with no-doc and liar loans that are sure to go bad sooner or later, and imperil the entire banking system.

What CNN fails to address is how America thrived for decades – centuries – with low interest rates, and with bank lending limited to people who were most likely to pay it back. An era before trillions for student loans for worthless degrees, and trillions for a national debt to drive equality of outcomes, instead of equality of opportunity.

What comes after the “K shaped” economy? Nobody knows. Will it be more deficit spending and higher taxes? I hope not. My guess is that those policies will lead straight from the K-economy to an “L" shaped one. Where everything flatlines, and nobody can afford to buy stuff.

I’m just sayin’ . . .





The Fed admits it can’t easily fix an economic problem it helped create

When Did Everything Become ‘K-Shaped’? - The New York Times

Government policies and the subprime mortgage crisis impact