Resolved: The Federal Reserve Should Raise Rates

This round I shall post my opening arguments then move on to refutations in my next round. Contention 1: The economy has recovered hence interst rates can go up. Since the 2008 crisis the economy has been in shambles as a result the Federal reserve (the Fed) has lowered interest rates to encourage spending and investment. This is the reason that the Fed lowers rates in the first place. [1] From the Mid 1990s to late 2000s the US has seen the greatest economic growth in it's history. Post 2008 Subprime crisis, we have seen a gradual growth rate in the US to the point to the US's GDP and growth rate has returned to pre-crisis levels effectively ending the crisis in the US as we have finially come out of the Crisis. [2] The reason that the interest rates were not raised this summer was due to the Chinese currency manipulation crisis and how it wrecked havoic on the Asian economy. Though the Chinese crisis harmed much of the Asian economy it had little effect in the US and the fact is that the Chinese manipulation and their actual currency value have been following a corrilative path, so there wasn't much of an issue that has occured. The US survivng this crisis was a test to the American economy showing its strength on the matter, not a weakness. [3] When it has come to Big Cities we have seen a massive improvement rate since the crisis and even the people living there seem to agree. When it comes to the stats we can see that none of the big cities annouced worsend or no change conditions and 40% in medium sized cities reported Significant improvement since the crisis. [4]We can see that since the whole point of lowering rates is to help improve the country out of a crisis and since I have shown that we are offically out of the crisis then we can see that these 0-0.25% interest rates on no longer needed. If they stay low as they are and do not turn within the next 6 months then we will have a full blown crisis on our hands. Contention 2: Low Rates will Cause economic termoilThere are several issues that will occur, but in this contention I will only get into a few. The reason, as addressed in the previous contention, is done to fight off recession. With the interst rate near zero since 2008 the federal reserve does not have the tool to fight off recessions making the US economy very vunerable and possibly open to a crash worse than that of the one in 2008 of which I intend on getting into this round. [5] The first issue triggering this crisis is that of low investments. With low interst rates people haven't been able to make much money when saving their moeny in the banks. Another key issue is people on pension plans are being hurt in this case as under these low rates their funds are as low as ever and this has been occuring since 2008 harming these senior citizens which is a key and important part as this has caused and will continue to cause a burden on families by having to provide for their parents if this continues which will continue to harm the economy due to a reduction in spending by consumers which was one of the reasons behind the Great Depression. Secondly, we have asset prices. Since savings and pension plans are failing people have been turning away from that to more riskier investments in costly assets. [6] With people already having less savings and all their hopes are on this risk when it comes crashing down people will be taken advantaged and the economy will crash harder than it did in 2008. This has already been seen cracks in the much of these assests which is already costs millions of dollars to many Americans. [7] This will lead to a repeat of the 2008 Subprime crisis, because just like then mortages are low from these interest rates and when they actual begin to rise there will begin the entire cycle all over again and the federal reserve has nothing to do to fight that. Sources1. ( . http://www.investopedia.com...)2. (. http://alphanow.thomsonreuters.com...)3. (. http://www.moneyandmarkets.com...) 4. (. http://blogs.wsj.com...) 5. (. http://www.federalreserve.gov...) 6. (. http://www.riksbank.se...) 7. ( . http://www.npr.org...)