OilFinder2 wrote:EDIT: BTW, according to that graph, and using your own criteria, the 1950's must have been some sort of economic basket case because, after all, interest rates were extremely low!
Umm, the Fed didn't invoke ZIRP during the 1950's. By "ZIRP" I mean that the Fed has intentionally set a zero-interest rate policy.
The zero interest rate policy is a macroeconomic concept describing conditions with a very low nominal interest rate, such as those in contemporary Japan and, since December 16, 2008, in the United States. It can be associated with slow economic growth.
Under ZIRP, the central bank maintains a 0% nominal interest rate. The ZIRP is an important milestone in monetary policy because the central bank is no longer able to reduce nominal interest rates. Monetary policy is at its maximum potential to drive growth under ZIRP, because the central bank has no more tools left to stimulate borrowing. ZIRP is very closely related to the problem of a liquidity trap, where nominal interest rates cannot adjust downward at a time when the loanable funds market has not cleared.
When monetary policy is already used to maximum effect, to create further jobs, governments must use fiscal policy. The fiscal multiplier of government spending is expected to be larger when nominal interest rates are zero than they would be when nominal interest rates are above zero. ...