US Federal Reserve props up zombie companies that should have collapsed – RT’s Keiser Report
RT’s Keiser Report talked to Steven McClurg of Exponential Capital about there being ‘no limits’ to the Fed’s money-printing to fight the ‘deflationary trap.’
“When you’re bailing everybody out, essentially you are bailing nobody out, and certainly hurting the middle class and the working class in the United States in the process,” he says.
According to McClurg, the very easy monetary policy has caused big investors, like insurance companies and pension funds, to purchase much riskier products because they need the yield.
“This state of monetary policy has propped up a lot of companies that really shouldn’t exist right now. A lot of these companies, producing inferior goods…”
“So, we have these zombie companies that have been running around for the last ten years, that should have collapsed, so that new innovations could actually come out,” he explains.
Those companies were not innovating any more, McClurg notes, they were simply selling goods so they could make their debt service. “And their debt service was actually quite low… the Fed was propping them up.”
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