ALBERT EDWARDS: It is already too late to raise rates

It may already be too late, regardless of whether the Federal Reserve is patient or not.

In a note Thursday, Societe Generale's Albert Edwards writes that the Fed's easy monetary policy since the last recession has achieved some of the opposite effects of what was intended.

One of the main goals of very low interest rates, Edwards says, is to encourage spending instead of saving.

Edwards highlighted comments from the Bank for International Settlements' latest quarterly review on how easy monetary policy in the eurozone could effect the economy.

Edwards notes that private savings have risen even though rates have stayed low and household net wealth grew to a record $83 trillion in the fourth quarter of last year.

Here's why that happened, according to Edwards:

I believe the causality has been reversed in the aftermath of Alan Greenspan's bubble-blowing era - loose monetary policy drives asset prices, fostering increased private sector borrowing and spending. That was the disastrous policy that led to the unprecedented 2000 private (household + corporate) sector financial deficit of 4% of GDP (all corporate), and the same ruinous policy that drove the deficit up again to peak in 2007 (all households).

The problem with using asset bubbles to drive an economy is that when the bubble bursts, private sector borrowers realise they have been taken for a mug and correct their savings behaviour aggressively, causing a recession. That same barbarically naive policy remains in place today.

Here's a chart Edwards included, showing that household net lending/borrowing remained quite high.