NEW YORK (TheStreet) -- The Federal Reserve didn't raise interest rates this week, and that's too bad.
The central bank's zero interest rate policy and its past rounds of quantitative easing are killing the economy. The labor market is still weak, regardless of what the seriously misleading unemployment rate statistic tries to tell us. Job openings are at record highs (suggesting companies can't find the right talent), while the percentage of U.S. adults who are working or actively seeking a job is at its lowest level in almost 40 years. Retail sales early this year were distressingly weak. Second-quarter revenue and earnings for companies in the S&P 500fell year over year.
Bottom line is the economy has not fully rebounded even after almost eight years of zero interest rate policy and all of that quantitative easing.
Even as the Fed plays with its models, it is missing the big picture. An economy grows when companies with good ideas are able to get funding, find talented people to work on them and are able to operate in an environment that is conducive to their success.
The Fed's policies since the financial crisis have encouraged people to put their money into riskier investments than they'd prefer. By definition, riskier investments have to generate higher rates of return to compensate for their greater level of risk. High levels of risk are also associated with ideas that probably shouldn't get funding but manage to get it by promising really high rates of return. If investors are pushed into more "higher risk/higher potential return" investments than they'd normally like, that means more of these bad ideas get funding.
In an ideal world, only good ideas get funded because when bad ideas get funded, investors lose their money and resources such as people, time and raw materials get wasted. There's a net loss to society. (Some degree of bad ideas is a relative good because it serves as a warning and provides lessons to others on what not do.) When investors lose their money and resources get wasted, it drains the economy.
Add in what are overly burdensome regulations and a tax code that even the IRS doesn't seem to understand. Even the great ideas struggle under the burden of trying to jump through all those extra governmental hoops.
With respect to interest rates, there is no easy solution. Interest rates need to come up to more normal levels, but today that is a bit like dreaming of a bright future for a 17-year-old girl who's eight months pregnant, dropped out of school, ran away from home and has covered her arms and neck with skeleton tattoos. It's possible, but it will take a lot for us to get there.
No matter what the Federal Reserve does, however, we can all do our part to reduce the burden on companies that have good ideas by electing politicians who will reduce regulations and fight to simplify the tax code.
In the end, that will mean more jobs and more money to invest in the next great idea.
This article is commentary by an independent contributor.