This graph seeks to show that the Fed should have been normalizing interest rates in the green area when there was the momentum of increasing aggregate profits rates. The “global” economy would have had better discipline, better balance in order to not create cyclical debt imbalances in US dollars. (Cyclical means that at a certain point in the business cycle, the imbalance becomes a problem.) Moreover, the efficiency of the US economy would have been greater. Higher interest rates imply more productive companies and consequently better net social benefits, as long as the interest rates are normalizing with the profit rate cycle and ...
