February 1, 2020
HE REFUTES HIMSELF:
Why interest rates are free marketers' favorite tool (Jeff Spross, February 1, 2020, The Week)
Right now, inflation in the U.S. is remarkably low. As a practical matter, that's the justification for keeping interest rates low: As long as prices remain stable, why not leave credit cheap, and allow jobs to keep growing and wages to keep rising? But there's also the worry about financial bubbles: that higher interest rates discourage risk-taking by investors, while lower rates encourage it. Thus, even if inflation is low, maybe we should hike interest rates anyway in order to ward off the possibility of another 2001- or 2008-style bubble and burst?
Having conceded the facts about the lack of inflation, the notion that rates are particularly low disappears. .
Posted by Orrin Judd at February 1, 2020 7:38 AM