Raise Interest Rates Part II
A couple years ago when Benny B. was slicing interest rates like lunchmeat, I wrote a controversial post titled Raise Interest Rates. It certainly wasn't a popular idea then and with the threat of double dip, its not popular now. In the previous blog I stated my argument as such:
What if the fed raised interest rates? I know its a strange idea. Its definitely not a popular idea. But if you look at the circumstances, the basic circumstances, it makes sense. We have a downturn caused by too much easy credit. A shift from a nation of savers to a nation of debters. So wouldn't the logical answer be to get rid of the easy credit and return us to a nation of savers?
I think that statement is just as relevant now as it was then.
Russiangambit posted a good article yesterday explaining why QE didn't work the first time and why it won't work the second time.
Now Yahoo Tech Ticker has an article essentially echoing my sentiment on interest rates.
Memo to Bernanke: Forget 'QE2', the Fed Should RAISE Rates to Help the Economy
Personally I dont think the Fed is keeping rates this low and providing QE because he "cares" about the economy. I think he's doing it to keep the big banks from failing as the assets on their books continue to rot. But thats just the cynic in me.
As I stated before, due to the unpopularity of this idea, I don't expect alot of recs. If nothing else, I hope to provide food for thought.