We take a ride in the way-back-machine and arrive in 2004. The housing market, fueled by exceptionally low interest rates, is heating up unacceptably. Anecdotes about incredible appreciation of real estate assets were everywhere. People were flipping homes, there were television shows about it. I remember that I fully expected the Fed to, rightly, increase rates. All of my life the Federal Reserve Bank had more or less done its job, that is, to manipulate interest rates as a regulating mechanism on the economy. As inflation occured rates were raised, as deflation and stagflation occured rates were eased. It made sense and it worked, erm more or less. But in 2004 Alan Greenspan simply doubled down and lowered rates further clearly causing the enourmous housing bubble and its attendent devastation when housing began to slip. Ever since 2004 I've been watching and wondering when the Fed would raise rates. It seems that over the last decade the Fed has lost its independence and has become beholden to the White House, first Bush and now Obama. A phone call from the White House seems to suffice to arrest the Fed from performing its regulatory function. Yeah, if you raise rates you will hurt business, households and the like but how long can reality be ignored? To me it seems that the Fed has duct-taped the accelerator pedal to the floor and is just going to leave it there. Thoughts?