Interest Rates

The Federal Reserve has been buying $85 billion a month of Treasury securities in the open market, EACH MONTH! This has the affect of putting downward pressure on interest rates. (Notice that the $85 billion per month, or $1 trillion per year, is about the same size as the government’s deficit spending.)

History shows that really low interest rates result in increased borrowing, which results in increased private sector spending and investing; all of which stimulates the economy. Unfortunately, we are not seeing the kind of growth we expected. Some of the problem relates to the fact that the Great Recession was so deep and broad. Some of the blame can also be placed on a lack of trust in government by our corporate CEOs and Boards of Directors to invest while Washington DC is drowning in out-of-control spending and debt.

Interest Rates

Interest Rates