What is Behind Raising the Interest Rate in America

প্রশ্ন · Question

On 15/3/2017, the Chair of the US Federal Reserve, Janet
Yellen, announced that the Federal Open Market Committee decided
overnight to raise the interest rate by a quarter of a percentage. This is
the second time that the interest rate has been raised within three
months, and it was noted that it will be raised twice later this year ... It
is known that raising interest (usury) means the recovery of the
economy, but the US economy is still suffering from crises, so how can
this be explained? Thank you.

উত্তর · Answer

US interest rates were reduced to almost zero during the
2008 financial crisis, and remained so for seven years until December
of 2015, when Yellen also pointed to raising interest rates (usury) for
several times during the year 2016, but the implementation of raising
interest rates (usury) has failed, and only the interest (usury) rate at
the end of the year was raised, and to understand the reasons to raise
interest rates (usury) or reduce them we say the following:
1- The purpose of determining the interest rate (usury) that is put in
practice through the decisions to buy and sell US Treasuries is to
determine the monetary policy, especially knowing the availability of
currency in US markets, and this is necessary for two main reasons:
• Because the lack of currency in the market if the interest rate
(usury) is high, it will slow economic growth, because people do

not get to borrow from banks because of the increase in
interest rates (usury).
• Because the increase in the cash currency in the market if the
interest rate (usury) is low, it leads to inflation, due to
increased cash supply in the markets because of the demand
for borrowing due to lower interest rates (usury).
2-Since 2015, Yellen has said that the interest rate (usury) needs to be
raised, because the long -standing economic recession in America is
over, and economic growth is improving, and raising interest rate
(usury) now is better than raising them after inflation starts. This is
Yellen’s economic philosophy to raise interest rate (usury).
3- This argument is unconvincing, because the US economy is still
weak, but American and even Western monetary policy is tied to the
decisions of politicians, and not based on purely economic factors as it
should be, and the decisions of the US Federal Reserve should also be
independent of Government policy, but the reality is that the decisions
on interest rates (usury) are merely political and are according to
political and economic requirements. The seven governors of the US
Federal Reserve are appointed by the US President and are approved
by the Senate for a period of fourteen years, And the chief and his
deputy from within the Board of Governors existing is appointed by
the President of the United States for four years, and they can be
reappointed during their term of office several times as desired by the
US President.
4- In practice, the decision of the US monetary policy is affected by
political factors; one is local, the other global:
• At the local level, US presidents want to develop the US
economy strongly at election time, because a strong economy
would support the re-election of the president or the candidate
of his party.

• At the global level, America is competing vigorously with the
economies of other countries, and at this time the economies
of the world are still weak due to the effects of the global
economic recession in 2008. Interest rates (usury) in Europe
and Japan were about zero, raising interest rates in the United
States will lead to a massive influx of funds towards America,
which could have catastrophic effects on the economies of
other countries!
5-Raising US interest rates (usury) now would be painful for other
global economies, though not as much as last year. The New York
Times reported on 9/3/2017, the following on Europe: Raising interest
rates (usury) officially could be far away for years, the European
Central Bank has left the interest rate index (usury) unchanged, saying
it will continue the stimulus measures to buy government bonds and
corporate bonds until the end of the year, albeit at a low level as of
next April.
6- China has realized America's intention to raise the interest rate
(usury) to harass Europe and withdraw capital to it, so it raised its
interest rate (usury) in conjunction with the American increase to
prevent the escape of Chinese funds for the raised interest in America,
and to participate in attracting European funds, so China was forced to
announce the increase in the interest rate (usury) immediately after
the issuance of the US decision. This is according to a report published
on 16/3/2017 on the Bloomberg website entitled "People's Bank of
China raises borrowing costs in conjunction with the Federal Reserve."
The Chinese Central Bank raised borrowing costs because the stable
economy and the revival of factories allowing the following of the
Federal Reserve when it tightens its policy.
7- In conclusion, raising the interest rate in America is not due to the
recovery of the US economy, but rather to bring capital from Europe to
get a higher interest rate than that in their countries, which is about

zero. The purpose is therefore not only economic but also to weaken
Europe, pushing it into crises leading to its dismantling.

29 Jumada II 1438 AH
28/3/2017 CE