Bend the laws of economics? LOL, what are the laws of economics? as an economist, I can tell you! NONE
How about: You can't spend money you don't have. Is that a law of economics or a theory? The Fed allows us to print money we don't have.
"pure market conditions"
the conditions that would be present without government intervention in the market.
The fed has nothing to do with the stock market
Wow, you are obtuse. The primary benefits of the Fed to the financial industry are the unlimited loans at extremely low interest rates which the banks expand credit from for further loans. The majority of new money creation takes place not at the Fed, but at the banks themselves. This pyramiding of debt creates bubbles.
Finance also benefits directly from the liquidity injections into the banking sector that inflates asset prices (including stocks/bonds/physical assets including real estate/etc.) which boost the value of their asset portfolios. The volatility of monetary expansion (both to the upside and the downside as banks can take the short and/or long side on any position) creates arbitrage/trading opportunities in the markets for banks to capitalize on. Low interest rates divert capital from the real economy to the financial sector and finance captures profits from monetary expansion. For example when interest rates are 5%, the payment goes to the depositors, but when interest rates are 0% the banks borrow access to the depositors' funds for free.
Fed inflated cycles of malinvestment driven booms lead to excessive debt and then to a bust. The Fed exacerbates these violent swings. Not to mention the Fed's inflation has eroded 97% of the value of the dollar since 1913. Even if inflation is only 2% (which it is much higher in select industries such as healthcare and college tuition and assets like premium real estate) compounded annually, in 21 years more than 50% of your purchasing power is lost.
Aside from the destruction of the value of the currency and extreme wealth disparity, the main problems this system creates are several:
1)the fact that it by nature causes crises when the principal+interest owed becomes much greater than principal only in existence there is no way to pay off all debts and so massive defaults are part of its design. Under a gold standard you could mine more gold to pay off interest. I should say, I don't really care about gold either but it would be helpful for the economy to be able to pay off interest with some type other type of asset, maybe both fiat created from debt and redeemable gold/silver/platinum/palladium notes created from underlying value in circulation concurrently? I don't know, I just know that the current system is unsustainable. It requires the constant expansion of credit (and a lot of this goes into malinvestment) and every time credit contracts, it's a catastrophe. The world can't be bulled up on credit all the time.
2) The extreme credit creation encourages leverage, excessive risk taking, creates inflation which causes wealth transfer and diverts resources and allows malinvestment to continue for longer than market conditions would permit.
3) Banks have proven themselves incapable of making wise decisions regarding their investments, the evidence is that their sitting on a ton of crap right now and have leveraged up even further. Derivatives time bomb (which is a consequence of monetary expansion having a whole lot of hot money flowing through finance) will eventually take down many large banks. Bank CEOs encourage leverage because if their bets work out it enhances profits and therefore enhances bonuses. Most banks that were owner operated partnerships were much less inclined to take excessive risks than publicly trade shareholders and CEOs concerned only with short term profits.
4) Banks pay no interest for the risk depositors take by crediting them their savings and they are able to create more inflation under a fiat currency. The original terms that were adopted with fractional reserve lending was interest payments on deposits.
Wealth disparity is at its highest point since the top of the 1929 stock market bubble because we are in a financial bubble right now caused by low 0% interest loans to Wall St. and the Fed pumping money into the stock market with Quantitative Easing driving down interest rates and inflating the bond market.