Keeping It Real
Few things affect economic growth and overall prosperity more than interest rates. Low rates create incentives for risk-taking, while high rates act as a brake on economic growth. Interest rates are the principal tool of the Fed, whose mandate is to promote maximum employment and stable prices. Rates do more than heat up or cool down GDP growth; they can cause bubbles to inflate or burst, threaten the stability of our national financial system, imperil the safety net, reduce the value of the dollar, and lead to social unrest. We thought it would be useful to put today’s interest rate environment in perspective by looking at the history of interest rates since the Kennedy administration.
