Today the Federal Reserve lowered their key rate to 0%. Huh? How does our economy work when money is lent for no interest? Well, they technically lowered the key rate to a range of 0% to 0.25%. This is the first time the Fed’s key rate has been this low ever. Without getting into a long, complex examination of this let’s take a very simple look at our economic problems:

• Consumers spent more money than they had by borrowing and going into debt
• Lenders lent money to consumers who did not have the capacity to repay the loans
• The government spent more money than it had by borrowing and increasing debt
• Lenders lent money to the government who does not have the capacity to repay the loans

If we had a free market, [Read more...]