It’s long been accepted that central banks—the Federal Reserve in our case—should be setting interest rates. Why?
Most economists will tell you how price controls distort markets. Rent controls are a prime example. Yet they don’t blink when the Fed engages in this exercise when it comes to the “renting” of money.
We’d be better off if the Fed and its peers left the price of borrowing money to the marketplace, and this episode of What’s Ahead lays out why.
Distortions are growing, from negative interest rates to dicey companies able to float mammoth amounts of low-yield bonds.
Manipulating rates is a key central bank tool for trying to guide the economy—itself a futile and often destructive activity.
Need Your Help Today. Your $1 can change life.