The Federal Reserve’s long-awaited September meeting ended with the Fed once again deciding not to raise interest rates. We have seen this movie before.

Consider a society in which government has been traditionally run by the Old Guys political party. They are great believers in “prudent government,” and their definition of prudence includes balanced budgets; having the government spend no more than it collects.

But along come the ambitious New Guys. They form their own political party with the goal of winning control of the government in the next election and begin campaigning aggressively on a platform that discredits the competence of the Old Guys.

“Look at our unpaved roads,” the New Guys thunder in their campaign speeches. “The people deserve paved roads so they can travel more safely and easily. But the incompetent Old Guys who run our government won’t give us the roads we need.”

To which the Old Guys calmly respond, “If the people really want paved roads, then the government should certainly provide them. But paving our roads will cost money, which would necessitate a tax increase.”

“Nonsense,” the New Guys shoot back. “Everybody knows the government is riddled with waste, fraud, and abuse. We’ll get rid of it all, which will free up more than enough money to pave our roads without raising taxes.”

Needless to say, the voters are drawn to the New Guys’ message of having the government pave the roads without making people pay more taxes. Getting something for nothing is very hard to resist in a society that lives beyond its means and wants political leaders who make certain the good times never end.

On Election Day, voters hand the government to the New Guys with a solid majority. But not long after they take over, the New Guys come face to face with two awkward realities.

First, there is not nearly as much waste, fraud, and abuse in government as they expected, and it doesn’t come close to adding up to the cost of paving the roads. In fact, the administrative cost of eliminating waste, fraud, and abuse is going to be more than the savings from doing so.

These all-too common realities put the New Guys in a real bind. The savings with which they planned to cover the cost of paving the roads turned out to be illusory.

They respond by punting on the use of fiscal policy to raise the funds necessary to pave the roads and deliver on their campaign promise before the next election.

Let’s get our “independent” central bank to pursue a policy of easy money and near-zero interest rates. That way, government will pay increasing portions of their ongoing expenses by simply “printing more money.” After all, the government has a monopoly on money as a commodity.

Equally important, Wall Street, which helps fund our campaigns, loves low rates and cheap money. Banks will pay almost no interest on savings, lending the savers’ money out to businesses, private equity funds, and hedge funds. Low rates also help companies that export goods.

Variations of this scenario have long played out in governments and it just happened again with the Federal Reserve’s decision not to raise interest rates. It’s a good deal for financial institutions that can play games with the cheap money they have been given without investing in the real economy.

As for the savers, including those who thought they had enough put aside for retirement, they will just have to learn to take more risks to achieve higher returns. As the Brits would say that’s “hard cheese” for the average American.

More evil has been carried out in the name of central banking than by any other force in human history, including religion.

Originally Published: September 26, 2015