Once again, a pundit explains the Fed's lack of balls. As if, raising interest rates is somehow a good and macho thing to do. It ain't. On a similar vein (I'll explain in due course), is a semi-review of Klosterman's latest Right Wing jeremiad.
To explain why interest rates are low, one need only look at the amount of moolah sitting in corporate coffers. A difficult number to track, since it isn't gathered de jure, but it's well into the multiple trillions of $$$. And, while the Fed stopped its QE exercise a long time ago, the ECB and BoJ and BoE are all easing. The problem, asserted in these endeavors many times, is that monetary policy/actions is pushing a string from the point of view of economic growth. Or, as in old western movies, "you can lead a horse to water, but you can't make him drink". Why aren't the corporations, the "job creators", going hog wild building new plant and equipment? With money so cheap, the thought goes, the CxO crowd would realize that opportunity is knocking on the door, and seize the day. Hasn't happened.
Well, this is where Klosterman comes in. His book, according to the reviews, argues that human knowledge has always been wrong in the past, so it must be wrong now. Klosterman doesn't know his ass from an asymptote. New knowledge replaces old myth, nothing more. Comets don't really cause droughts, fur instance. As we've gathered more knowledge, fewer myths offer explanation. Well, except to Right Wingnuts, who only believe myths. And, of course, Einstein didn't "replace" or "prove wrong" Newton. Einstein, et al, worry about the atomic world, while Newton worried about the macro world. It was Newton, not Einstein, that got us to the moon and Mars and such. Except providing the abstract tools (and that wasn't Einstein, but Rutherford who provided the concrete ones) for building the A-bomb.
So, we see interest rates in the real world not budging, and knowledge by some accounts going obsolete. Why are interest rates refusing to rise? It's Econ 101, children. There's more moolah sitting idle than is demanded by business to build out new plant and equipment. And the reason for that is we're on that pesky asymptote of knowledge where there just isn't a steamboat or internal combustion engine or transistor or ... to soak up moolah for investment. The semiconductor vector is about spent; on two fronts. First, node size is approaching the limit of reliability at the minimum number of electrons needed for deterministic execution. No, quantum computing is another cold fusion. And second, battery tech hasn't provided much increase over the last century. We've already exploited the lightest element we know we can control; that is, without burning or blowing up. Smaller nodes mean, to some point, lower power usage (offset by extra power needed to control leakage and such). We're near the stage where smaller doesn't mean lower total power. Until some chemist figures out a battery with at least 2 times current energy density, that part of the equation won't change. Again, that pesky asymptote.
Raising interest rates by fiat, that is, absent increase in real demand for investment, is simply the Damn Gummint passing taxpayer moolah to the 1% in order to satisfy their demand for idle income. That would be the end of western civilization.
"A man's got to know his limitations."
-- Dirty Harry