That's a job tailor-made for millions of players on the free market without any help, nudges, guidance, or big fat thumb on the supply/demand scale by the central bank.

It also seems equally obvious that under the current post-1987 regime of Keynesian activism at the Fed that interest rates have been way too low for most of the past four decades. Indeed, the very idea that interest rates on the money market should be negative or even close to zero in real terms is an out-and-out recipe for inflation, both with respect to goods and services prices on Main Street and also, most especially, with respect to financial asset prices on Wall Street.

Yet here is what we have had since Alan Greenspan and his heirs and assigns embarked upon the path of heavy-duty Keynesian macro-management of the US economy. Since the year 2000, the inflation-adjusted money-market rate (i.e., Fed funds) has been negative—often deeply so—more than 80% of the time.

Accordingly, the implicit thrust of Fed policy has been to severely punish savers, who, after taxes and inflation, have been badly crushed, and reward borrowers and speculators. The latter have essentially been offered free money on a short-term basis to fund their leveraged speculations via rolling over the Fed's cheap overnight money day after day for years running.

Indeed, Wall Street speculators literally loved the negative carry pictured in the graph below: It became the foundation for trillions upon trillions of easy, arbitrage profits in the futures and options market and via an endless variety of highly leveraged bespoke trading schemes.

Needless to say, the politicians on the banks of the Potomac were also enthusiastic about their resulting ability to borrow on a massive scale while still paying diminutive levels of annual interest on the soaring public debt. In fiscal terms, the Fed's negative real rates were the equivalent of a free lunch.

Still, the opposite ends of this 40-year chart tell you all you need to know about why central bank interest rate pegging is both counter-productive and unnecessary. Thus, back in 1984-1987, the real Fed funds rate was clearly not too high at positive 3-5%. That's because it was exactly during this five-year period that the ballyhooed "Morning in America" Reagan Boom occurred. Real growth averaged 4.8% per annum between 1983 and 1987.

Now, according to GOP orators, the Reagan Boom of 1983-1987 was the be-all-and-end-all of spectacular economic performance. So why in the hell did Jay Powell and his merry band of money-printers insist that the real Fed funds rate in Q3 2024 was too high at barely +2.0% and therefore warranted the 100 basis point rate cut it administered on the eve of the November election?

Moreover, at the present moment, the story is even worse. The Donald was pounding the table for a 300 basis point cut a few weeks ago when, during Q2 2025, the inflation-adjusted Fed funds rate had posted at just +1.27%. So what he apparently wants is a return to the inflationary Fed print-a-thons of the last several decades and to an implied inflation-adjusted Fed funds rate of, well, -2.27%.