Today, many Americans feel the weight of an economic system they believe is rigged—favoring the wealthy at the expense of everyone else. This perception has fueled political, social, and economic unrest, amplifying deep divisions across the country.

Those most vulnerable to this system often lack the resources or education to fully grasp the mechanics of what is happening. Yet this lack of understanding does not diminish their ability to feel the system’s effects: stagnating wages, rising costs, and a sense of being left behind. These challenges create fertile ground for frustration and disillusionment.

The macroeconomic systems that manage our economy and shape its outcomes—like monetary policy, the role of the Federal Reserve, and broader fiscal strategies—are inherently complex. Without the privilege of access to education, this complexity often functions as an invisibility cloak, obscuring how these systems work. As a result, people may become drawn to simple, sweeping promises of change from leaders who vow to tear down systems and challenge the status quo. The appeal of someone willing to “fight for the little guy,” even at the cost of breaking laws or norms, becomes compelling.

This phenomenon isn’t confined to one side of the political spectrum. It spans ideologies and can lead societies toward dangerous territory. Around the world, we can observe examples of nations turning to repressive, autocratic leaders, driven by the belief that these figures represent their only hope for relief and fairness. The willingness to empower such leaders—despite the risks to democratic systems—reflects the desperate need to address the inequities and challenges fueling these sentiments.

The Federal Reserve and Monetary Policy: Managing the Economy

The Federal Reserve plays a central role in managing the economy through monetary policy, which regulates the money supply, sets interest rates, and oversees banks. Interest rates, in particular, are a powerful tool that directly impacts lending, consumer spending, inflation, and recessions. Lowering interest rates encourages borrowing and spending, which can drive economic recovery, but it comes with hidden costs.

When interest rates are low, banks are incentivized to lend money, often encouraging consumers to take on more debt. This can stimulate short-term growth, but it also creates vulnerabilities. Historical examples show how low interest rates have fueled economic booms, only for those booms to collapse into devastating busts.

Boom-and-Bust Cycles: A Pattern of Inequality

The cycle of economic expansion and contraction—often referred to as boom-and-bust cycles—has shaped the modern economy. During the 1920s, for instance, low interest rates and speculative investments led to stock market inflation. When the bubble burst in 1929, the result was the Great Depression of the 1930s, marked by widespread unemployment and poverty. Similarly, the 1970s saw the “Great Inflation,” when excessive money supply diminished the power of the dollar, leading to the removal of the gold standard.

By the 1980s and 1990s, the economy entered a period known as “The Great Moderation,” characterized by smaller booms and busts. Yet policymakers allowed boom times to inflate into bubbles, confident they could manage the fallout. When those bubbles burst, such as during the housing crisis of 2008, the consequences were severe. The Federal Reserve responded with quantitative easing and bailouts for major banks, but struggling middle- and working-class families saw little relief. Many lost their homes to foreclosure and faced bankruptcy, deepening economic inequality.

Low Interest Rates: Who Benefits?

While low interest rates are intended to stimulate the economy, their benefits are distributed unevenly. The wealthy, who profit from fees and interest payments, gain the most. Meanwhile, the middle and working classes are left dependent on loans, mortgages, home equity lines, and credit card debt as wages remain stagnant. Rising prices for homes and goods, driven by these cycles, have made life increasingly unaffordable for average Americans.

Moreover, low interest rates discourage saving, as consumers see little incentive to accumulate wealth through high-yield savings accounts. Instead, the system encourages spending and borrowing, further enriching financial institutions while leaving most Americans vulnerable to financial shocks.

The Cost of Fighting Inflation

When inflation rises, the Federal Reserve often raises interest rates to slow spending. While this can stabilize prices, it frequently comes at the expense of middle- and low-income workers, who face unemployment and lower wages during these periods. This trade-off reflects an ongoing theme: economic policies that prioritize stabilizing markets often leave workers bearing the brunt of the pain.

Over time, the legacy of boom-and-bust cycles has driven up the cost of living and entrenched generational income inequality. Wealth is concentrated in the hands of a few, while the majority struggle with stagnant wages and mounting debt. This economic reality has fostered frustration, unrest, and political divisions, leaving society vulnerable to leaders who offer simple answers to complex problems.

Understanding the complexities of macroeconomic systems is vital to addressing these challenges. Without such understanding, it becomes easy to fall for promises to overturn the status quo without considering the broader consequences. Recognizing how economic structures work—and who benefits from them—can empower individuals to advocate for a fairer and more equitable system.