Federal Reserve Minutes released today show confidence in the US economy's improving growth. They also showed confidence that inflation would drift toward the Fed's target of 2%. As a result, they reinforce the view that the Federal Reserve will continue to raise interest rates as forecast, in order to tighten monetary conditions. There's one problem: interest income.
I think the interest income channel is an overlooked conduit of Fed monetary policy into the economy. And so, now that the Fed is raising interest rates, it makes sense to talk about what interest income means to the Fed's ability to tighten monetary policy successfully.
Zero rates starved the US economy of interest income over the past several years. That's not something the media concentrate on when they di...
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Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.