SunLakes of AZ Blog

The Fed should raise short-term interest rates soon and by quite a bit. Why, you might ask should they do this? Because rates at zero have done their job and because once the real crisis passed this spring the need for zero interest rates was over. Would it make any difference to anyone in the real economy if short-term rates were 1.5% instead of zero? We doubt it. Would the financial markets scream and yell? Sure. But, the financial markets aren’t the real economy and we shouldn’t let the tail wag the dog. The financial markets would get over modestly higher interest rates a lot quicker than the real economy would, so let’s do it.
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