Would Higher Interest Rates Boost US Growth?
The Federal Reserve cannot stabilize the economy, create jobs, and avert problems stemming from abnormally low interest rates simply by raising the federal funds rate. Rather, businesses must first create savings vehicles and make investments, to which the Fed can then respond by allowing interest rates to rise.
BERKELEY – Blackstone CEO Tony James recently published a column in the Financial Times titled “To revive America’s economy, raise interest rates.” This is a very bad idea.