Federal Reserve Keeps Nation at Zero
This is not just a short-term hesitation from the Fed.
Yesterday, the Federal Reserve’s Open Market Committee decided not to raise interest rates, just like it has for the last nine years. The nation has had seven years of 0% interest, despite the fact that, in the words of the Fed, “economic activity is expanding at a moderate pace.” The Obama administration keeps insisting the economy is doing swell. Yet the Federal Reserve just can’t bring itself to agree and raise rates. Part of the reason, the Fed noted in its announcement, is that countries like China and Greece recently added volatility to the global market. But this is not just a short-term hesitation, as the Fed sees at least three more years of Obama-induced economic stagnation. The Wall Street Journal’s editorial board wrote, “The Fed predicts a stronger economy and rising inflation next year, but somehow they never arrive. And sure enough, the Fed’s governors and bank presidents on Thursday again downgraded their median economic projections for real GDP growth in 2016 (2.3%), 2017 (2.2%) and even 2018 (2%).” Furthermore, as Investor’s Business Daily notes, the government has an interest in keeping rates low because of the national debt. Increase rates, and the amount of money it pays servicing the monster also grows. In the meantime, the Journal notes, the Fed’s zero interest policies are hampering the ability of middle class Americans to save.