Fed-Fueled Delusion: Why Artificially Low Interest Rates Don’t Create Growth—They Destroy It

Let’s stop pretending that the Federal Reserve is in the business of growing the economy. It isn’t. It’s in the business of manipulating signals, distorting markets, and misleading investors, savers, and the American public into making financial decisions based on fictional price signals.

Frank Shostak, in his recent piece for Mises Wire, masterfully cuts through the fog of Keynesian propaganda. He reminds us what the Fed and its cheerleaders never will: Interest rates aren’t tools for technocrats—they're prices. Prices that emerge naturally from individual time preferences, rooted in human action. When you tamper with those rates, you're not just tweaking a dial. You’re detonating a bomb inside the productive structure of the economy.

The Fallacy of “Stimulus”

We’ve heard it for decades. Lower rates = more spending = growth. This is the logic of a pyromaniac arsonist calling himself a heating technician. The central bank doesn’t create wealth—it shuffles it, siphons it, and eventually destroys it. Artificially suppressed interest rates create the illusion of prosperity, not the reality. Malinvestment thrives in the petri dish of easy money, not sound enterprise.

This is precisely how we got the housing bubble. It’s how we got dot-com delusion. It’s how we’re getting the current everything-bubble in real estate, stocks, government debt, and even corporate zombie firms that exist solely because they can borrow at near-zero rates.

Malinvestment and the Bust That Follows

Shostak correctly references Mises and Rothbard to explain how the Fed’s monkeying with interest rates leads to malinvestment. These aren’t just academic concepts—they’re the autopsy reports of every financial crisis in modern memory.

When the Fed pushes rates below what the market would naturally set, businesses interpret this as a signal that real savings are available. They aren’t. So they build, expand, and invest based on false assumptions. When reality sets in—when the Fed can no longer keep the illusion alive without runaway inflation—these projects collapse. The boom becomes a bust. This cycle isn’t a fluke; it’s engineered.

What About Consumption?

Another rotten apple in the economic cart is the idea that consumption drives growth. This is the tail wagging the dog. Production and savings precede consumption. You cannot consume what you have not first produced or saved. Stimulating consumption through inflation doesn’t create new goods or services—it simply rearranges the deck chairs while the Titanic takes on more water.

The idea that government-induced demand can replace private production and savings is the blueprint for stagflation, dependency, and long-term decline. It weakens individual autonomy, empowers centralized control, and hollows out the middle class in the process.

Central Planning Disguised as Policy

Every time the Fed sets a rate, it assumes it knows better than millions of people voluntarily trading, saving, and investing according to their real preferences. That’s not monetary policy. That’s price fixing. And price fixing, whether it’s on bread in Soviet Russia or interest rates in Washington, D.C., always leads to shortage, waste, and collapse.

We are living through the tail end of one of the most reckless monetary experiments in history. Negative real rates, unlimited QE, and now CBDC pilots are all signs that the banking elite know the game is coming to an end. And they’ll do anything to retain control—even if it means torpedoing what’s left of your purchasing power.

The Solution: Unplug from the System

Shostak’s message, grounded in Austrian economics, makes it clear: the Fed is not your friend. It’s not an engine of stability—it’s a driver of systemic risk. And it’s time people stop waiting for Washington or Wall Street to save them from a crisis they themselves created.

You have to act now, before your savings are vaporized in the next round of financial “stimulus.”

Take Action:

To protect yourself from the inevitable fallout of central bank malpractice, I urge you to read Bill Brocius’ free ebook, 7 Steps to Protect Your Account from Bank Failure. 

And if you’re serious about insulating your wealth and understanding the forces truly driving this economy, get your hands on Bill’s groundbreaking book, The End of Banking As You Know It, and consider subscribing to his Inner Circle newsletter. At just $19.95, it’s the best investment you can make before the next collapse hits.

The Fed won’t save you. But knowledge, preparation, and independence might.