John Crudele

John Crudele

Business

Dear John: The Fed will never stop quantitative easing

Dear John: Why don’t you tell your readers the truth? The reason the Federal Reserve will never stop quantitative easing is [that] it can’t. This whole thing is a lie to keep insolvent banks open, inflated home prices from collapsing and do-nothing Wall Street bankers from selling pencils on the street corner. Eventually the market will demand the truth, and it will all collapse. When people wake up, they will be grabbing pitchforks and lighting torches. C.V.

Dear C.V.:
I hardly think I’ve been sugarcoating the situation. In fact, you really don’t go far enough in your criticism of QE, which the Federal Reserve decided to keep fully intact this past week.

The Fed, as you say, is in a bind. Yes, this is helping insolvent banks and doing most of the other things you suggest.

But the lower-than-low interest rates caused by QE are also keeping the US government afloat.

Washington is the biggest borrower in the world. So an increase in interest rates would hurt it most.

The problem, as I’ve said many times, is that the Fed doesn’t have full control over interest rates; the markets do. And as you suggest, eventually regular lenders to our government — the Chinese and Japanese governments and OPEC come to mind — are going to demand higher rates.

So I take offense to your suggestion that I haven’t been telling the truth about all this. If I get any more honest, I’ll have to see a therapist every time I write a column.

Dear John: I know the principle behind rising and falling interest rates. But for years I’ve been wondering how merchants can foretell as far as five years in advance what rates are going to be, [like] auto and furniture companies that offer 0 percent financing for five years. How do they know so far in advance? Thanks for your reply. H.H.

Dear H.H.:

The short answer: They don’t know what rates will be any more than you, I or the Federal Reserve do. They are trying to sell you stuff with gee-whiz come-ons. And they’ll take their chances on the rates.

If you are getting truly cheap financing, you can be certain that you aren’t getting the lowest price on the item you are buying. You’ll get one or the other.

The one thing that merchants do know is the cost of the thing they are selling. And — except under very rare circumstances — they aren’t going to take a loss on the sale.

Readers:
Last week I provided advice to a father who had taken out a student loan for his daughter. He was pretty much screwed.

But if you are a student who took out a student loan in your own name, here is some more information.

There are some ways a student can get forgiveness on a college loan. One is via the Public Service Loan Forgiveness program.

Income-based repayment might also help her out.

Some teachers can also get loan forgiveness.

Send your questions to Dear John, The NY Post, 1211 Ave. of the Americas, NY, NY 10036, or john.crudele@nypost.com.