Interest rates have been held near zero for so long they have begun to seem normal. But that's a delusion. It's no more possible to run a market economy on free credit than it would be to run one on free gasoline or free labor. It works for the government and the well-connected but not for the rest, especially small businesses and new workers. The result is a heavily distorted global economy, a devastating "new normal" for growth rates and a multi-year collapse in real median income, which worsens income inequality. • Let interest rates rise. The most important growth policy in 2014 would be for the Federal Reserve to lay the groundwork for raising interest rates, as it did for reducing bond purchases in 2013. It's high time the Fed moved past zero rates-even a 0.5% interest rate would allow credit markets to work better.
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