Could higher interest rates help the economy?

We live in an age when central bankers grace magazine covers like pop stars. But what if they don’t actually know what they are doing? In the United States, at least, quantitative easing and low short-term interest rates may have done as much harm as good.

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The Fed is out of ideas

Today’s Wall Street Journal has an article by Jon Hilsenrath about what the Fed is likely to consider in its upcoming meeting on November 1 and 2 in response to the stubborn weakness of the U.S. economy. This is significant because Hilsenrath is the journalist that the Fed trusts the most for conveying its views to the public. A close reading of what he wrote can tell us a great deal about what the members of the FOMC are thinking. Worryingly, it appears that they are out of good ideas.

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