From America, a conclusion which applies here with even more force than there since rates in the US have been rising: Trump’s Keynesian Monetary Policy.
The New York Times reported today on Trump’s advocacy of easy-money Keynesianism.
President Trump on Friday called on the Federal Reserve to cut interest rates and take additional steps to stimulate economic growth… On Friday, he escalated his previous critiques of the Fed by pressing for it to resume the type of stimulus campaign it undertook after the recession to jump-start economic growth. That program, known as quantitative easing, resulted in the Fed buying more than $4 trillion worth of Treasury bonds and mortgage-backed securities as a way to increase the supply of money in the financial system.
Simply stated, the Keynesians are all about artificially boosting consumption, but sustainable growth is only possible with policies that boost production.
Why raising rates is good for production is to modern ears a complete conundrum. Think of this from The ABC:
The RBA concedes it is puzzled by the “tension” between strong jobs growth and a weak economy.
If the jobs data is right, then everything is OK and unemployment will fall, wages will rise and it will be high-fives back in the RBA’s Martin Place redoubt.
If GDP data is right and things are slowing — remember GDP grew at an annualised pace of just 1 per cent in the second half of last year — then a cut is order.
Absolutely incomprehensible to a modern economist is the absence of any relationship between the rate of growth and unemployment. Just as incomprehensible is the possibility that lowering interest rates from the low rates they are presently at might actually do harm and do no good whatsoever at all.