Tom Harkin: “I have a chart to show that the real Federal funds rate is at its highest level in nine years. What does that mean? What…”

“I have a chart to show that the real Federal funds rate is at its highest level in nine years. What does that mean? What that means is that real rates of interest are at a very high point. For example, even Chairman Greenspan said earlier this year that real interest rates are at a historically high level, compared to all the years from World War II until now. What does that mean? Well, that means that the farmers in America whose commodity prices are going down all the time, our livestock producers and our farmers have to pay exorbitantly high interest rates--real interest rates--when they are already squeezed with low prices. It means that our business sector, small businesses, and others who are creating jobs, who need to borrow money for expansion or even for job training or retraining, find that they are squeezed because of high interest rates. So they don't do it. So what happens then is our economy starts to slow down. I will point out that in the first quarter of this year, our growth was 5.5 percent; it was 1.6 percent in the last quarter. Many economic signs point to a possible recession, possibly a downward spiral in prices. Then we see what is happening in foreign economies and in foreign currencies. Because of our high interest rates, we find that their economies are going down and they, in turn, can't buy any of our products because of the excessively strong dollar that we have.”