Just a quick question. I know there’s an adage that you don’t raise interest rates in a recession. Of course I don’t know of any recession in the past where interest rates were essentially zero.
My theory is that raising interest rates would cause both business and consumers to buy so that they could lock in today’s rates. I think the main reason we’re not recovering is that there’s no reason for businesses or consumers to “buy now”. If the fed started raising rates people would want to re-fi. They’d want to buy a new car. Any large purchase they’d been putting off they’d potentially make to avoid having to spend more in the future. Obviously you can’t raise rates forever, but we know an economy can run just fine with interest rates in the middle single digits so why not try?
What’s the flaw in my logic?