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Memo to Fed and ECB: Raise Rates

Posted on July 05, 2009

Dear Sirs,You have slashed rates to the bone and you are now signaling your commitment to keep them there for as long as it takes . Assuming your aim is to revive credit markets, i.e. generate a healthy amount of credit demand and creation for the greater benefit of the economy, what you are doing is mostly wrong.Oh, I do understand that your actions and statements are in line with academic monetary policy theories. But, they are misplaced when it comes to what happens in financial markets in practice and work against what we are hostage to: our animal spirits . You know, fear, greed.. ...

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economy , fed , interest rates , markets