Or, as the newspapers put it, “Fed pledges to keep interest rates low.”
The catch is that the Fed is now saying they will maintain their ultra-low interest rates (as low as 0%) as long as unemployment is above 6.5%. The problem with this is that the two are unrelated; low interest rates don’t drive employment. (I know, the theory is that with easy credit available businesses will expand and hire more employees. In fact, they won’t do that because there’s no demand right now, and won’t be until consumers have money in their pockets.)
What this actually does is provide businesses with monetary compensation for not hiring people. “Keep unemployment high,” says the Fed, “and we’ll keep loaning you money at absurdly low rates, which you can use to buy back your stock, drive up the price, and cash in your executive stock options. Cha-ching!”
The commoners who are unemployed or unemployed? Yeah, fuck them.
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