Interest Rates | What's Left

Long the focus of US poverty activists and workers' representatives, arguments for maintaining low interest rates are gaining some support from some unlikely places.

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Different areas of finance capital have started to question whether the unelected US Federal Open Market Committee (who sets monetary policy) jumped the gun when they raised interest rates late last year. There is a growing call from both these groups to take a deeper look at the lower-end of the struggling global economy and for the federal government to rethink its rate increase.

What is interesting about this expanded lobbying is that the US-style of bank regulation is an extremely undemocratic one. The central banking system is deemed too important and so it is kept completely separate from the elected branches of government. The Federal Reserve has a history of managing the financial sector with an eye to sustaining massive profits for banks and US hegemony in the banking industry and not for working people. Low interests are great for people with debt, needing debt, or who are trying to make ends meet with low wages. However, under capitalism, low interest rates are not so good for pension funds and large investors or for the long-term stability of the financial system.

Liberals might want their hyper-capitalist techno-future, the resulting massive job displacement, and high-levels of income inequality but the result will be a wider split between those who gain from higher interest rates and those who suffer. The awareness of this extreme inequality will hopefully grow calls for democratic reform of the Federal Reserve system that is designed to make sure finance capitalism is rigged for the banks.

Federal Reserve: Credibility on the line