Sharon at Point Breeze 1507

My simple reason is either simple and simple, or simple but profound, and you can decide for yourself which it is.

My reason is that the most effective tool the Federal Reserve Board has for steering the economy are interest rates.  But when interest rates are near zero, it’s like a steering wheel that is turned all the way to the left.  And you won’t do much steering with the wheel all the way to the left.

So time to return the wheel towards center.

When we consider what things were like when the Fed reduced rates to zero, they were pretty bad.  They were very bad.  Since then, we’ve seen the economy recover, the stock market rebound, retract, and then go up again.  This suggests two things.  One is that the economy isn’t bad anymore.  Indeed our published Economic Performance Index shows it north of a normalized 50%, suggesting expansion.  Second, it suggests that the economy isn’t responding to Fed rates.

So raise them some.

How much?  Hey! That’s what they’re paid for, not me.  They can decide what’s appropriate.

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