When the Fed lowers rates, what does it do

1)  It reduces the value of the dollar, 2) Increases the cost of imports, ie oil, long term interest rates, 3)  Induces savers, in search of better returns to abandon deposits and buy equities, 4) covers the butts of hedge fund mgrs, 5) affords derivatives breathing room, ie time to unravel in an hopefully orderly fashion.  Corps won’t invest and consumers won’f purchase / finance unless they 1) see a reasonable opportunity for their investment to achieve a healthy return and 2) feel confident they can take on more debt and have the income to pay it off.  Bottom  line, these rate cuts are supposed to hype growth by stimulating this economy, ie get consumers to buy, buy, buy.  I think consumers are tapped.  Consumer debt is at all time high.  Depreciating housing values, ie loss of equity; falling 401(k) values just makes consumers feel poor, unwilling to take on more debt. So look at the net effect.  Who really benefits?

I suggest the Chairman of Fed should stop cutting interest rate since the last two times he did it, the economy has not gotten any better, instead it has been getting worse as the days go on. The gov’t and its elite, superintelligent, and super well-educated staffs should think of ways to create more jobs in this country and make the people of this country better instead of the people of other countries. By keeping to cut interest rate as the last resort to boost the economy, only solve the instant problems little, but will create a lot more serious problems in the long run. As we have seen in the past couple cuts that there has not much improvements in the eco since the last two cuts, instead, what has happened to the price level? It has shot up! Oil price is over $100 per barel, gold is close to $1000/oz, durable goods is srinking, price of house is continuing to decrease, stock markets keep faltering, so what do the last two cuts help the eco? Nothing!!!! Wow, thanks to Mr, Genius, Bernanke, and our super well-educated representatives in the gov’t.

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