Stanley Druckenmiller spent some on CNBC discussing the malinvestment and misallocation of resources due to the interventionist policies of the Fed. See an excerpt here.

For some additional perspective on the topic, let's revisit the financial impact from Zero Interest Rate Policy (ZIRP) as it applies to responsible savers. We just need to make a couple adjustments to my 2011 post "Savings Lost" The True Cost of Zero Interest Rate Policy. To assist in calculations and charting, the following data sets provided ample information:

- Total Savings (FRED SAVINGS)
- Average interest rates on savings deposits FRED M2OWN)
- Interest Income - IRS tax stats, BEA NIPA tables
- Effective Federal Funds Rate (FRED DFF)

Whether or not the the omnipotent FOMC truly understands all, they clearly understood the impact of arbitrarily lowering the Fed Funds rate. Consult the chart below to see the historical relationship between total savings and the amount of interest income earned on the savings.

Note that prior to 2001, as savings increased (blue line), interest income received increased (red line). After 2001, however, the interest earned stopped increasing. The green line shows the impact of the Fed Funds rate on average savings interest rates on interest bearing accounts.

Scaling into the shaded area representing 1986 to present, the following chart depicts the actual Fed Funds rate determined by FOMC.

As savings increased when Fed Funds rate remained around 5%, interest income continued to rise. However, post 2001, the interest income received stopped growing at the same rate. With the exception of 2005 to 2008 when rates went back to "normal" in the 5% range - the interest income earned has remained stable at just under 1 trillion.

Let's apply some thought experiments and make a couple calculations: What would happen if the FOMC were removed and the Fed Funds rate "floated?" If we look at the historical rates from the 1920's for the 10 year note, we the mean (average) rate would sit around 5.82%. With a floating Fed Funds rate, banks would be competing for money and providing responsible savers with some interest income.

By calculating the estimated interest income from historical ratios (orange shaded area), we can see that as of 2012, approximate interest income would be close to 3 trillion on savings of 6.7 trillion. Whereas the actual interest income reported by NIPA remained at 1.1 Trillion, the difference in interest received and lost interest equals roughly 2 Trillion. Remember, this is interest income to SAVERS forever lost since 2001. By summing the entire shaded orange area, SAVERS have missed out on 9.9 Trillion in earned interest. The final chart above clearly illustrates who is NOT a beneficiary of the low interest rate environment.