Rates should ideally be set such that the increase(or decrease) of actual productivity matches the increase of the money supply. If people aren't taking enough

Rates should ideally be set such that the increase(or decrease) of actual productivity matches the increase of the money supply. If people aren't taking enough loans, then the rates should be lowered. If people are taking to much loans, rates should be raised. The Fed's mandate does not do this, and we very often have way to much debt followed by short spikes of not enough debt, so we are destined to continue the boom and bust cycle. The way I see it the major problem happens to be with when we take out debt on zero-sum goods. When you take out debt and create something new with it, and that debt pays off, everything is fine. When you take out debt to buy something like land, it messes up a fundamental balancing force and speculation runs amok.