A Fed rate cut will not solve our economic problems

Senator Elizabeth Warren used the jobs data to restate her argument that the Fed is waiting too long to cut rates.

She said Fed Chair Jerome Powell "Risks driving the economy into a ditch," and that he "Needs to cancel his summer vacation and cut rates now."

Although both couch their calls for rate cuts in language that suggests it may already be too late, there is still acceptance of the idea that the Fed can prevent a recession.

All our monetary central planners must do is recognize the wisdom of Warren and Krugman and lower the interest rate by exactly half a percent in their next meeting, and the good times will continue.

There is a big difference between interest rates that are lowered by an increase in people's willingness to save and invest in production and rates cut artificially by political authorities.

Not only does an artificially-lowered interest rate trick producers into acting as if there are more resources available for production than there are - generating the boom-bust cycle we find ourselves in the middle of - it also incentivizes people to consume more than they otherwise would, because the rate of return for saving and investing is now lower.

The hyper-consumerism and economic chaos that pervades our society is precisely what results when governments artificially lower interest rates - the very policy Warren and Krugman are desperately calling for the Fed to enact yet again. 

https://mises.org/mises-wire/fed-rate-cut-will-not-solve-our-economic-problems