Do high interest rates slow economic growth?
No. To a slight degree, high interest rates are associate with faster economic growth, because the federal government, in paying these higher rates, adds more money to the economy. 1. A large economy requires more money than does a small economy. 2. All forms of money actually are forms of debt. 3. Therefore a large economy requires more debt than does a small economy. 4. Therefore, a growing economy requires a growing supply of debt. 5. When inflation is at 3%, the total amount of real money in the economy will decline by 3%, unless more debt/money is created. 6. Further, when the population increases 1%, the amount of money per person decreases by 1%, unless more money is created. 7. Therefore, with inflation at 3% and population growth at 1%, a debt/money increase of 4% is needed each year, just to remain stagnant. 8. For a GDP growth of 4% on a per-person basis, the total debt/money supply must increase at least 8%. 9. The trade deficit (more money leaving the country than entering