At present the interest rate is more political than sensible.  It is policy driven, affected by the governments desire to do something that natural economic forces would otherwise resist.  The most recent example was the governments desire to get people into homes they could not afford, a program started by democrats, and coddled by them up until the dam broke at which point it was someone elses idea.

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Read it all Here:  http://granitegrok.com/blog/2010/06/drop_dead_fed.html