Interest rate direction is central to modern U.S. monetary policy, and the last two decades, that direction’s been mostly downward. The Federal Reserve drove the federal funds rate to near zero in late 2008, kept it there for seven years, and rates have stayed unusually low through this decade. As the Fed now approaches its December meeting, it’s once again weighing the health of the dollar (which demands raising rates) against the loose money policies benefitting the stock and housing markets by lowering them once again. It raises the question of which demographics the Fed really wants to serve.  

Low rates have been the rule since the Great Recession; even the 2015-2019 hikes were far below historical norms, causing a prolonged period of loose money, cheap borrowing, surging asset prices and rapid money-supply growth. When COVID struck, the Fed doubled down on this approach, returning rates to zero and resuming quantitative easing. Circulating currency grew around 30% between 2020 and 2022, contributing to the highest inflation in forty years. The dollar, meanwhile, is far from the powerhouse it was in the 1980s, when high rates under Paul Volcker reversed years of inflation, producing both a stronger currency and an economic expansion.

In short: the U.S. has been running an accommodative monetary regime for most of the last fifteen years. That matters now because lowering rates could mean........

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