You Make an Excellent Point, Sir

David Malpass is becoming one of my favorite commentators on finance and economics. If you are a follower of economic news and watch networks like CNBC, you'll find yourself adrift in a sea of self-seeking doubletalk. Malpass is a clear thinking man who has a posting at The National Review where he writes about taxes and small business.

In it, he addresses an important issue with the Federal Reserve's current monetary policy of zero interest rates. The question is, what is my incentive to save if my return is zero and how can the money supply grow (and spur lending) if I don't want to save?

Here's the money quote, "The money supply (which includes cash plus the balances of checking and savings accounts) surged after the Lehman bankruptcy in late 2008. But money-supply growth has almost stopped today, meaning there’s no longer much incentive to add to a savings or checking account while the interest rates on them are stuck on zero." Read the whole thing.