Interest rates should be a signal about consumption vs investment.
In theory if we didn't have central banks this might be possible. However, central banks "print" money to adjust short-term interest rates that are a lever for influencing demand for money. It seems unlikely that it is possible to decouple supply from demand in the real world.
1. Currencies are created by some government or government-equivalent (e.g., maintainers of bitcoin/bitcoin fork), and these governors set the supply of currency. Sometimes they use interest rates, sometimes they just print more currency, sometimes they set a schedule for mining digital currency, it doesn't matter. However, the "free market" is inherently manipulated by the "owner" or "creator" of the currency.
2. If you consider a "commodity-currency" like gold or diamonds (or probably bitcoins) whose supply is not determined by a central authority, these commodity-currencies can also be manipulated. In fact, without the check of a government, capitalism works in such a way that these commodities become centralized into a few large holders who are incentivized to manipulate the currency. This is why governments like to get off of the gold standard, so they can manipulate their currency without interference from other governments.
> In theory if we didn't have central banks this might be possible. However, central banks "print" money to adjust short-term interest rates that are a lever for influencing demand for money. It seems unlikely that it is possible to decouple supply from demand in the real world.
With gold standard, central banks could not directly print money. It was abandoned by the US about 40 years ago, and by Europe, even earlier (because world wars).
Paper money is much easier in this regard.
Gold standard only really refers to paper money which was used as a proxy for actual gold. Arguably it's even preferable to physical coins as historicly people would often clip them.
If I record correctly, bank can borrow from the Fed and turn around and leverage up and buy bonds and notes. Basically risk free money for banks.
Let's call it a "True" interest rate. Central banks directly influence the shorter end of the yield curve. They can influence the longer end only indirectly.
I think the closest measure we have is the difference between the interest rates banks charge from loans compared against the "overnight rate" of interbank lending. This is controlled by the fed (through the federal funds rate) and is another control the fed has to control interest rates.
If I remember correctly, one of the hindrances for the 2008 recession recovery was that the interest rates (offered by banks) remained high as the fed lowered the federal funds rate. The goal of the rate is to control lending and in that recession it was not working.
[1] https://www.imf.org/en/Publications/WP/Issues/2016/12/30/The...
Employment is okay, but more than a 10th of the population is in their working years but not working.
"but more than a 10th of the population is in their working years but not working."
Fed has very limited set of things they control. They don't do fiscal or policy.
Which prices have been stable since the 1980s?
Some of this the fed controls, some of this they don't. They are not all powerful. For example, the share oil revolution has done a lot to reduce prices. Has nothing to do the the fed. China coming online as manufacturing powerhouse has also reduced prices. Again, fed has nothing to do with that.