It’s important to remember that raising interest rates did not cause the problem. A reversion to a more natural rate of interest elucidated the failure that already existed. Twenty years of falling interest rates, and the promise of further drops, enabled a 40 trillion dollar bond market to flourish, and for bond traders and banks to speculate with depositors’ funds because they didn’t anticipate any stress on the economy that would stop the music that enabled the ever-decreasing interest rates.

Then Covid came along…a stress on the economy. Then inflation came along…a stress on the economy. The Fed should increase rates, albeit much more slowly and naturally. Rates should never reach 0%, but should be around 6% to discourage speculation and excessive leverage.