Re:World food prices hit 10-year peak – FAO
by makomk on Monday October 11, 2021 @09:01AM
(#28827830)
Interest rates are low because the Fed has signalled that if the market charges large companies too much to borrow money, they'll just print money and lend it to those companies instead in order to drive interest down to a more acceptable level. Well, that's a bit of a simplification, but it's basically how the Fed's bond-buying program works.
Interest rates are low because investors and savers accept them to be low. If they were truly too low then companies would borrow and invest until full employment happens and wages go up at which point inflation would go up and so would the interest rate. No such thing happens. Germany has a debt brake and low debt to GDP because they are scared of the interest boogeyman and the only thing that happened is that the yield is zero or negative for every duration up to 30 year government bonds. A lot of people want to save money nowadays which puts downward pressure on interest rates.
If you were to raise interest rates then savers would save even more and the economy wouldn't die from withdrawal effects, it would die from a plain lack of money in the real part of the economy because saving money would be more profitable than doing real work.