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Response to Purveyor (Original post)

Wed Jul 16, 2014, 02:11 AM

6. Low interest rates will NOT stimulate the economy.

That is the same fraudulent claim that reducing taxes will stimulate the economy.

Both claims are based on trickle-down economics.

The economy will be stimulated only by increasing demand, that is, by increasing spending on goods and services.

The way to increase demand is to put money in the hands of those who will spend it.

This requires distributing spending so as to give income to the working and middle classes who will spend it, NOT the banks and NOT Wall Street, which suck the money out of the spending loop, and essentially are hoarders of money.

So, how should monetary assets be distributed to improve the economy?

Government should spend money on products and services that improve economic development such as infrastructure, education, health care, and research and development.

Another way to increase demand is to bring off-shored jobs back to the U.S. That means getting rid of one-sided, corporate-written trade agreements like NAFTA, CAFTA, the WTO, the IMF, and scuttle trade agreements such as the TPP.

Bringing outsourced jobs back to America will automatically increase wages as demand for workers increases.

However, to help the middle and working classes and increase demand in the near term, the minimum wage should be raised now to stimulate the economy.

The interest rates being kept low by the Fed are the interest rates on depositors' accounts, while the banks keep interest rates on credit card balances at 14 percent and higher.

This policy is the absolute reverse of what the banks should be doing to stimulate the economy. Middle class consumers are getting nothing for keeping money in a bank account, while the banks take a huge chunk out of middle class assets via high interest rates on loans (especially credit card balances) that the middle class could use to spend on goods and services.

The Fed is working for Wall Street, not main street. The Fed is not the solution. The Fed is part, a big part, of the problem.

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Replies to this discussion thread
Arrow 7 replies Author Time Post
Purveyor Jul 15 OP
1000words Jul 15 #1
1StrongBlackMan Jul 15 #2
rtracey Jul 15 #3
yourout Jul 15 #4
BeyondGeography Jul 15 #5
LineNew Reply Low interest rates will NOT stimulate the economy.
AdHocSolver Jul 16 #6
Psephos Jul 16 #7
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