Federal Reserve ought to raise US interest rates tomorrow. Don’t wait til March.

 The Fed’s primary job ought to be keeping the economy growing.  Making money available to buy inventory, build new factories, hire more workers, raise their pay, finance building new aircraft, new cars and trucks, new ships, new railroad rolling stock.  Part of this is keeping prices stable.  If companies and people get the idea that the dollar will be worth less tomorrow, they will buy stuff today, before the price goes up.  Resulting demand will raise prices because the supply side isn’t big enough to supply everybody’s wants today.

 

Unfortunately the Fed usually sees it’s job as to keep the stock market speculators speculating.  They borrow money to buy stocks, running up the price of the stock.  Then they sell.  For this to work, the Fed has to make borrowing money reasonable cheap.  And stock speculation does not grow companies or hire more workers.  We don’t need it.

 

Better would be a Fed policy to keep prices stable, and money for real economic purposes available.  If this means interest rates so high that stock speculation becomes a loser, tough.