The twisted logic of the Fed

THE Federal Reserve announced on Dec 16 that it would raise policy interest rates by ¼ to ½ of 1 per cent, ending the seven-year policy of keeping Fed interest rates near zero, and would embark on a path of "gradual" interest rate increases in order to "normalise" interest rates. This announcement had been long expected by pundits, economists and the financial markets, and, more to the point, had long been pushed by Wall Street and their supporters.

It was telling that the first question asked by …