Proper

Congress does not need to set interest rates, it only needs to produce money if the market requests it. If Congress took back its power to originate money, the market would set rates. If there was greater demand for fresh liquidity, then private lenders would pay a higher interest rate to obtain new money, and then they would add their mark-up. If the system was topped off, then private lenders would have fewer customers requesting loans, and that would cause them to seek less money from government. Interest rates would then decline, in response to the falling demand for money.

In a proper, constitutional monetary system, the government never pays to obtain money. The government originates all legal tender, like a wholesaler. Private lenders then fill the role of retailing that new money to the general public. Competition between private lenders would keep a lid on interest rates, although the government would still need to set ceilings on what private lenders could charge, in case banks tried to price fix amongst themselves and set some rates artificially high.

It is the Fed's ridiculous struggle to make the general economy react to the quantity of money that ruins all chance of sustainable growth. The current system has the equation backwards. The size of the money supply and the price paid to rent that money will react to demand from the general economy.