So it's interesting. The stated goal of the fed is to keep inflation and unemployment low. As of recently one of the reasons for the inflation is supply chain d

So it's interesting. The stated goal of the fed is to keep inflation and unemployment low. As of recently one of the reasons for the inflation is supply chain disruptions stemming from the shutdown of China. Over the last 13 years the fed has played a much greater role in the market by purchasing securities and setting the discount rate near to zero. The goal being to soften the blow of the housing collapse and to help being the economy back up. What I find interesting about the low interest rate is that low cost lending changes what types of projects are economically viable. If you look at the formula for NPV the discount rate is within the denominator. What this is saying in other terms is that a projects value is manipulated by the discount rate. On the whole low yield capitally intensive projects are possible to take on during a time of low lending costs. Sure the math makes sense here but what does this mean in aggregate. Does it make sense that the value a project supplies to humanity is dependent on the interest rate? No it really does not, it's not required for it to be proportional whatsoever. Capital is just a standardized term for motivation. All that money can buy is someone else's time or effort at the end of the day. What the NPV formula is truly giving us is a ratio of how much human effort will be required and how much output you are likely to get from such efforts. One of our issues both nationally and globally is that our interest rate is too low, (and we have no way to fairly correct for this). Higher cost of lending prunes projects that are low yield. This prunes projects that are not a large benefit to society. The fed has a hard time moving back to this because of the extreme difficulty everyone would face. Let's say they raise the rates to 18% suddenly homes value must drop to reflect the people's ability to pay the new mortgage rates. Best case this would dramatically reduce worker mobility. Worst case you wipe out the largest asset most might have. I do believe the fed is used as a tool is used to keep people working. If you track the cost of staples such as a loaf of bread or milk vs the hours required to earn such things on minimum wage you will find that it's all about the same over time. Logically this makes no sense whatsoever. Does this mean that we have gotten no better at producing these commodities over the last 100 years?