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The Fed could step aside and let The Market decide what interest rates should be. Then, when home prices got higher, interest rates would get higher (eventually, driving down home prices) and when home prices got lower, interest rates would get lower (eventually, driving up home prices). In this way, the market self-corrects or maintains balance. The Fed is what they call: government intervention, big government, socialism, meddling, etc, etc. It would be nice if the market paid more attention to fundamentals and less attention to The Fed. However, with our current system, that would be incompetent
But I thought Greenspan was the "Maestro"? (insert sarcasm).
It's a good time to be a FED Chairman, and get book deals, speaking fees, etc. Especially when you created the biggest bubble in the world. Then acted suprised, shocked, confused when it popped.
The FED just cuts and cuts. What will cause them to raise rates to levels of 10% or more? Why don't they just lower the rate to 0% and give money away? Is there anything that can cause rates to increase?
my guess is as soon as the bailout money is given away there is no reason to keep people feeling good..
also a new president...
Sounds like they will give it away and then have to raise it. Then blame it on the democrats so next election will go republican.
In the 80s did it not get to like 14% or something like that? Yikes.
I wish mortgage rates were 20%. The higher interest would be necessary to offset risk and get those inflated home prices down to 3X local incomes or less. Instead of investing in homebuilding and shopping centers, money should go to factories and farms that produce something in return. Higher interest rates encourage saving and discourage borrowing.
I wish mortgage rates were 20%. The higher interest would be necessary to offset risk and get those inflated home prices down to 3X local incomes or less. Instead of investing in homebuilding and shopping centers, money should go to factories and farms that produce something in return. Higher interest rates encourage saving and discourage borrowing.
I agree. If investors are afraid to buy mortgages and insist on higher rates, fine; it will only force home prices down. As home prices plummet, real estate investment (in mortgages) will seem less and less risky, leading to lower and lower rates! And, in the meantime, we encourage savings, which everybody will spend later
Well, they say we got big government I guess they're right!
Interest rates are going down because inflation is going negative.... Real interest rates now are pretty high. 7% with 3% inflation is the same as 4% with no inflation...
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