The fed has been playing with interest rates for 50 years with no clear evidence that what they are doing really works. The Fed began cutting interest rates from 5.25% in Sept 2007 to zero by Jan 2009 to stimulate the economy which was obviously a failure. I think this recession proved that when business sees a serious problem in the economy, low interest rates are not going kick start the economy.You have to ask why the huge cost differential in labor cost.
The federal reserve has presided over a 99% decline in the value of the dollar since the fed was established early last century. This has caused huge inflation over the century. Wages kept pace in the first half of the 20th century, but purchasing power peaked for the US worker in the 70's.
Between robotics, computerization, and offshoring of jobs, there is now an excess of labor in the US, wages have stagnated for decades.
The average family is in a pickle. They kept up in the 70's - 90's by sending their wives into the workforce and becoming two income families. Now inflation has eaten through that trick.
The problem is the fed and inflation. They have been lying to the public for years, understating inflation to curb cost of living adjustments (COLA's) to social security recipients and govt. retirees (actually attempting to retard spending).
We look to the president to solve this, but he can't. The fed has to do a better job controlling inflation, so we don't have to push for such high wages to keep our standard of living up. This is why we have priced ourselves out of the labor market internationally.
Energy costs (oil), housing, healthcare costs, food, college tuition. Those are the big killers of the middle class.
We need a national energy policy aimed at getting us off oil over the next 30 years (at least reduce dependence, nat. gas?, could Boone Pickens be right?), and we need to curb increases in healthcare cost at twice the inflation rate year after year. We need fewer people, no more than two kids.
Neither the repubs nor the dems are addressing the real problem, IMO, maybe because they realize they can't. The repubs tried to overstimulate housing to get the economy going in the last decade, but that didn't work out too well.
In a labor intensive economy, low interest rates and temporary tax cuts or a govt. stimulus package all work well to get the economy going (see the 50's and the 60's). After the nature of the economy transforms, to one that is highly automated and highly off-shored labor base, the same old stimuli don't work as well. Corp. sales and profits will improve, but they don't need as much domestic labor to achieve those improvements.
We will just have to learn to live with less, a lower standard of living. Smaller houses, smaller cars, smaller vacations (if you can afford any at all), less smart phones, just less.