Home Markets The left’s low-rate fantasy makes inequality worse

The left’s low-rate fantasy makes inequality worse

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Unlike many on America’s left, I’ve always been sceptical that ultra-low interest rates make things easier for the poor. Keeping rates too low for too long encourages speculation and debt bubbles. When they burst, they always hurt those on low incomes the most, as we witnessed during the 2008 financial crisis.

And yet for years, progressives have argued that loose monetary policy and low interest rates are necessary to promote employment, particularly at the lower end of the socio-economic ladder.

This is not the case. While easy money may have helped create a bit of wage pressure in low-end service jobs, unemployment kept falling in recent years even as the Federal Reserve began to raise rates from ultra-low to still-low levels.

Meanwhile, academic research has shown that the tendency of low rates to fuel market…

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