The Portfolio Channel Effect

By making the price of borrowed money artificially lower, you encourage companies and households to borrow more money. This is called the portfolio channel effect in the official lingo - but you may also hear it referred to as financial repression specia. It means that all the retires and pension funds who buy us treasuries are going to be forced to buy risker assets like mortgaged back securities or dividend paying stocks. I'm not crazy about the nudge, but i get it. That situation, the worst depression since the 19 thirties, where everyone is losing their job and no one is willing to invest any money in anything, is exactly what ben bernanke and the fed faced