The Lie We’re All Told: Lower Rates Mean More Jobs The mainstream story goes like this: If unemployment rises, the Federal Reserve should slash interest rates. Cheaper borrowing means more spending, more investment, and more jobs. Simple, right? After the 2008 financial crisis, the Fed cut interest rates to near zero and held them there for seven years—yet U.S. unemployment still peaked at 10% in October 2009, according to the Bureau of Labor Statistics, and millions of workers never returned to full-time employment. Despite this record-low rate environment, the promise that lower rates create more jobs failed to materialize for large segments of the labor force. Wrong. This idea comes straight out of Keynesian economics—the belief that central planners can…
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