With the federal government $11.9 trillion in debt, with many Americans maxed out on credit cards and owing lots of other money, and with the economy staggering, it is certainly proper that the Federal Reserve has decided not to raise its "bank lending rate" beyond a very low 0.25 percent. That means many banks may charge interest rates of about 3.25 percent.
Credit is necessary for our economy and our people to do business. But we owe too much, with no prospect of early remedy.
We hope the low interest rate will help tide us over this difficult economic period.
Holding down rates artificially,as the Fed is doing,creates distortions that must be delt with later. Because the rates are so low,the Fed has become the principal buyer of their own bonds. The bond market has become an illusion of funny money.
The low rates and falling dollar have made the US the latest source for the carry trade,creating another distortion that can't end well.
Over the last two decades the federal government has increasingly intervened to control and manipulate markets and statistics. The collusion between the Fed,the Treasury,and the investment banks is siphoning off the wealth of the country for the benefit of the few. If we don't face up to that,the rest really doesn't matter.
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