Film: The Fed Alcohol Industry

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Fed alcohol is used as a metaphor throughout the film to describe the way the government has been fueling the economy with low interest rates. The years of growth have been regarded as an ongoing party. However when the “punch bowl”, the low interest rates, were at the lowest point, the Federal Reserve continued to drop the interest rate, therefore refilling the punch bowl. In the spring of 2001, due to the economy contracting, the Federal Reserve lowered interest rates from 6.5% to 1.75% to save companies from going bankrupt and keep unemployment down. When 2003 came, the interest rate was cut all the way down to 1%. Naturally, American consumers resumed the spending binge and continued getting “drunk” on the Fed alcohol. A determinant of