Feds Drop Interest Rate by 3/4 of a point

Discussion in 'Politics & Religion' started by usasportstraining, Mar 18, 2008.

  1. #1
    That's a pretty big drop and they will likely drop it even more. I thought reducing the interest rate would bring on more inflation. Is that not true?

    Let alone, is the interest rate drop and extra income tax refund going to be enough to turn things around?

    [​IMG]

    Fed Cuts by Three-Quarter Point,
    Suggests More Reductions Likely



     
    usasportstraining, Mar 18, 2008 IP
  2. lightless

    lightless Notable Member

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    #2
    Atleast it's a start. Would like to see how the global stock markets react.

    http://www.investopedia.com/ask/answers/132.asp
     
    lightless, Mar 18, 2008 IP
  3. usasportstraining

    usasportstraining Notable Member

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    #3
    Me too. What if many other countries did the same thing, lowering rates?

    Would it strengthen the dollar?
     
    usasportstraining, Mar 18, 2008 IP
  4. guerilla

    guerilla Notable Member

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    #4
    How will they react to further debasement of the US currency?

    Probably drop and dump US dollar based assets like hot potatoes and move into other currencies like the EUR, YEN, CDN, AUD etc.

    This is a stupid, stupid move. Rapid inflationary measures of this sort are mostly untried in these circumstances. It's like trying to put out a fire with gasoline, in the hopes it can extinguish itself before it spreads...
     
    guerilla, Mar 18, 2008 IP
  5. guerilla

    guerilla Notable Member

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    #5
    This is the grand test, the final exam for Central Banking. Last week, central bankers in other countries were all trying to come to the FED's aid, but they have to be careful, because that is how the Depression got started.

    The US domestic economy got into serious trouble trying to help the Bank of England after WWI.
     
    guerilla, Mar 18, 2008 IP
  6. usasportstraining

    usasportstraining Notable Member

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    #6
    Very interesting points.

    There sure seems to be a lot of "rescuing" going on lately. BearStearns, mortgage companies and the victims, and whatever else.

    And how will they pay for it, with more credit?
     
    usasportstraining, Mar 18, 2008 IP
  7. guerilla

    guerilla Notable Member

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    #7
    Yup. Gas can.

    [​IMG]
     
    guerilla, Mar 18, 2008 IP
  8. TechEvangelist

    TechEvangelist Guest

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    #8
    I'm concerned about interest rates on savings and investments, as well. We are getting back into a situation where interest paid on savings, CDs and bonds is less than the rate of inflation.
     
    TechEvangelist, Mar 18, 2008 IP
  9. demosfen

    demosfen Peon

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    #9
    No, it would take something more radical. Like abolishing the Fed and going back to what worked
     
    demosfen, Mar 18, 2008 IP
  10. soniqhost.com

    soniqhost.com Notable Member

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    #10
    If other countries followed then the dollar would stay the same or rise, buy other countries are raising interest rates or holding steady which is part of the reason for the drop in the dollar.
     
    soniqhost.com, Mar 18, 2008 IP
  11. soniqhost.com

    soniqhost.com Notable Member

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    #11
    The reason Bear Sterns collapsed is not because of bad debt or bad mortgages, it collapsed because its clients starting pulling money out of the firm in droves while ING wouldn't borrow Bears Sterns money on short term basis as it done previously. Had there been no fed the ramification's would be astronomical. It would of done greater damage to the economical and financial system, luckily we have a Fed while not perfect is trying to resolve the situation. Which is something you want to get rid off
     
    soniqhost.com, Mar 18, 2008 IP
  12. Meener

    Meener Banned

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    #12
    The 3/4 drop is not going to help America's Recession. Nobody is going to be taking out a loan with the economy it is. People are waiting for their "free money" from the government coming in May. Lets wait and see how we spend it.
     
    Meener, Mar 18, 2008 IP
  13. guerilla

    guerilla Notable Member

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    #13
    Not every country can so easily debase their currencies. Not to mention that the risk of concerted debasement through monetary inflation could lead to global hyperinflation, which could be so bad, I don't think I could imagine how bad it could be.

    Basically, it was under-capitalized. Poorly managed.

    Problem => Reaction => Solution.

    The FED creates the problem by monkeying with rates, this causes a speculative bubble, and investment houses like BSC have to play the high risk, high leverage game if they want to stay profitable.

    Then when BSC gets in trouble, the FED comes to the rescue.

    The problem is, when the FED created the bubble, it devalued the savings of anyone holding cash, or on fixed incomes (welfare, social security).

    Then when it fixes the problem, it devalues again.

    So by creating the problem and fixing it, the FED rips a lot of people off in the process. There is absolutely no need for a Central Bank. Getting rid of it would allow people to save again, and would restore price stability.

    It's actually funny that people would argue for the FED.

    Great record under the FED. Why do we need it again? To clean up its own messes at our expense? :rolleyes:
     
    guerilla, Mar 18, 2008 IP
  14. wisdomtool

    wisdomtool Moderator Staff

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    #14
    I am afraid that the mess would be cleared up using public expenses, there is no way to clear this without such usage.

     
    wisdomtool, Mar 18, 2008 IP
  15. guerilla

    guerilla Notable Member

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    #15
    I'm not sure I understood you. What are "public expenses"?
     
    guerilla, Mar 19, 2008 IP
  16. wisdomtool

    wisdomtool Moderator Staff

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    #16
    A slip of the keyboard :) public funds.

     
    wisdomtool, Mar 19, 2008 IP
  17. guerilla

    guerilla Notable Member

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    #17
    Do you mean, public funds that are private funds which the government has confiscated (taxes) or public funds such as government debt (monetary inflation)?

    The government doesn't actually have any funds, which is why I ask. :D
     
    guerilla, Mar 19, 2008 IP
  18. wisdomtool

    wisdomtool Moderator Staff

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    #18
    Affirmative, correct, yes, taxes or public funds (that are derived from private taxes) or government debts :)


     
    wisdomtool, Mar 19, 2008 IP
  19. guerilla

    guerilla Notable Member

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    #19
    The point I am trying to make (which I think you understand completely) is that there are no public funds.

    The government either takes the money from us, or prints the money and debases the money we hold. So in essence, all funds are private.

    And if private funds have to clean up the mess, shouldn't the folks whose funds are being used own a stake?

    Why do we subsidize JP Morgan buying Bear Stearns? If there were private citizens willing to bail BSC out, then they should have ended up with an ownership stake.

    I can't take the gas from your car so my delivery trucks can make their rounds.

    Unless the government colludes with business...
     
    guerilla, Mar 19, 2008 IP
  20. wisdomtool

    wisdomtool Moderator Staff

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    #20
    Yeap I understand where you are going from, in the end Adam Smith still rules I guess. Fed shouldn't be playing the role they are playing now, it is now more and more akin to the central planning economies of the former Warsaw Pact nations.

    I hope they know when is the time to let go, or else the deeper you sink into a controlled economy, the more difficult it is for you to get out of it and the more painful it will be.


     
    wisdomtool, Mar 19, 2008 IP