Monetary policy in Washington - and it is done in Washington - is completely cock-eyed and broken. We are in the third year of a zero interest rate regime. Now that sounds good -- it was something that was supposed to get us out of that horrible economic crisis we were in. What could be better than very cheap money; essentially being able to borrow money for nothing? But it doesn't work out that way. Zero percent interest rates deny people the ability to benefit from saving: on a fixed income many people want interest rates to be existent so they can get some income off of their savings. Without savings, there's less credit.
But also it affects business in a very negative way. A lot of the banks, particularly mid-sized and smaller banks that were not in "too big to fail" category that you only hear about in Washington, cannot lend money without borrowing from the larger banks, and at zero percent they are very reluctant to give the lines of credit that even a profitable business needs in order to hire. Businesses that are sound are not going out of business because we don't have great entrepreneurs in this country. But if you can't draw on a line of credit, and those are down by two-thirds as compared to 2008, expansion is very difficult such that everything is put on hold.
The zero interest rate regime is now in its third year and on top of that Ben Bernanke did something he called quantitative easing -- you can just think of that as printing money because that is what it is. It was supposed to have ended this month but nobody knows for sure whether Mr. Bernanke is really going to end it because the economy is so weak. Nine percent unemployment in the third year of a so-called recovery is totally unacceptable, and there is no sign that the economy is getting any traction from easy money.
But these are all Washington-based issues. These are things that you send Senator Grassley, Senator Harkin, and your congressman to Washington to solve.
Why am I here at the grassroots? Well, Congress is involved. Congress is a codependent in this Federal Reserve policy because when they run big deficits, when they spend money that they don't have, in effect they go across the street to the Federal Reserve in Washington and ask them to print the money that they are spending. So I have a confession to make: I have spent the better part of a year, over a year at my day job (I work in Washington D.C., I have to admit that) trying to get congressmen to act on it. Because they created the Federal Reserve almost a hundred years ago they have the power to do something about it. But I can't, and other colleagues of mine have not been able to get them interested.