A Third Reason to raise Interest Rates?


I read Paul Krugman, Ben Bernanke and others. They mention two reasons why some people are calling for interest rates to rise…

  1. Possibility of Inflation
  2. Possibility of Financial instability

Now I would like interest rates to rise, but I have never seen any inflation coming. In fact, it seems that inflation will stay low when interest rates stay low in our present economic conditions. I have written about that before in relation to the Fisher effect here on Angry Bear.

As far as financial instability, my concern is more inequality which is subduing effective demand.

But there is a third reason that these economists don’t ever seem to mention… The economic inefficiency of low interest rates…

A Third Reason to raise Interest Rates?

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