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EconoMeter: Upside/downside of low interest rates


Friday, August 5, 2016

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Kelly Cunningham, National University System
Answer: YES

Artificially low interest rates send false signals to the economy, preventing savings and investment, and encouraging reckless borrowing and needless spending. This prevents business and capital investment needed for real and lasting economic growth. As a result, historically low growth in productivity and business investment occurred over the past eight years. Rising asset prices are the only support in an otherwise anemic economy. The cycle of debt needs to stop for actual economic recovery to occur.