Economic Growth Requires More Than Low Interest Rates

Jon Alternative Media, Banking, Economy, Fiscal Policies

Many commentators and economic experts are of the view that the Federal Reserve is running out of tools to keep the economy going given the very low level of interest rates. It is also argued that despite a steep downtrend in the policy rate since 1980, the underlying growth of the US economy has been following a down trend.
This must be contrasted with the previous period when the underlying trend in the federal funds rate was heading up while the underlying growth of economic activity followed a rising trend.

This post was published at Ludwig von Mises Institute on Sept 26, 2016.