Mark Calabria
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There is also little evidence that the Fed’s current rate policies have improved the labor market. Advocates of the Fed’s current policies often claim that a lack of “demand” is holding back the job market. Yet consumer spending has steadily increased since 2009 and growth in the labor market has not kept up with that increased demand. This suggests that the problem is not a lack of demand, but rather problems specific to the labor market, which are beyond the control of the Federal Reserve.

Our economy is facing a number of problems today. Too high interest rates are not one of them. If anything, the Fed’s policies of channeling credit away from the private sector and towards the federal government (and its mortgage agencies) has denied badly needed credit to the more productive elements of our economy. Ultimately, interest rates should be determined by the interaction of savers and investors, not driven by the arbitrary whims of government officials in Washington.

This article appeared on US News and World Report Online

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Mark Calabria

Mark A. Calabria, is director of financial regulation studies at the Cato Institute.