Facing a nationwide famine as a result of repeatedly salting the crop fields, time-traveling twenty-first century slacker Joe Bauers suggests that the future-world dimwits use water for the crops rather than Brawndo. "But Brawndo's got what plants crave," the dimwitted White House advisors reply, echoing the official corporate marketing line repeatedly, "It's got electrolytes."

The movie is a warning about the dangers of blindly accepting the official propaganda line, not thinking critically, and not doing any of your own research. And I can't help but see this movie scene every time someone tells me that lower interest rates stimulate the economy. "But lower interest rates have got what the economy craves," they say. "It's got stimulus."

But does it? 

Since the United States first engaged in its ultra-low interest rate experiment in the year 2000, the U.S. has only once in those twenty-four years attained a 3% real per capita GDP growth rate (the COVID snap-back year of 2021), while real per capita GDP growth sailed past 3% three times (or more) in each and every decade prior to 2000. Japan began its experiment with low interest rates in the early 1990s and it has been among the slowest growing economies in the world since then, growing at an average of less than one percent on a real per capita basis. And during the Great Recession, the only advanced economy to survive without a calendar year of negative economic growth was Australia, which had the highest interest rates of any advanced economy through the 2008-2009 recession years. 

Joe Bauers said, "The plants aren't growing, so I'm pretty sure that the Brawndo's not working." And I want to say, the economy is not being stimulated, and I'm pretty sure low interest rates are not working.

I've been on this kick since 2013 about low interest rates not accelerating economic growth. And I was happy to see I was not fully alone when my Libertarian Institute colleague Joseph Solis-Mullen published "The Federal Reserve, Interest Rate Suppression, and the Reach for Yield" on October 2. Solis-Mullen claimed of low interest rate skeptics that "the empirical record continues to bear them out. Artificially low rates do not create wealth; they reallocate risk and misallocate capital."