The Fed recently announced that interest rates should be kept low through at least mid-2013. The discount rate is at 0.75% and was last increased by 0.25% in February 2010. Instead the Fed should increase the rate to at least 2.50%.
Lower rates make it cheaper to borrow, but the last thing we need right now is more debt. Higher rates reward saving and maintain the value of the currency, which keep commodity prices, such as gasoline, lower, in dollar terms.
If you want to help the big banks, keep interest rates low. If you want to help the average person, raise them. It is obvious which side the Fed is on.
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From: http://peterschiffblog.blogspot.com/2011/08/ultra-low-interest-rates-are-among.html
"By committing to keeping them near zero for the next two years, the Fed has actually lengthened the time Americans will now have to wait before a real recovery begins. Artificially low interest rates are the root cause of the misallocation of resources that define the modern American economy. As a direct result, Americans borrow, consume, and speculate too much, while we save, produce, and invest too little.
This reckless policy, designed to facilitate government spending and appease Wall Street financiers, will continue to starve Main Street of the capital it needs to make real productivity-enhancing investments."
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