Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Mortgage rates don't always follow the fed. In recent weeks, mortgage rates have climbed quite a bit.
Yup. The fed cutting the rate does NOT lead to lowered mortgage rates, though I think it should lead to lower rates on things like car loans, credit cards, etc.
The FED is in a real bind with higher inflation needing restriction but lack of liquidity demanding some loosening. It will be interesting to see where they go... nowhere maybe.
Mortgage rates are not really following a traditional lead since the turmoil in reselling mortgages have changed demand substantially in the current market. Rates will probably stay a little higher than traditional benchmarks would predict.
If the Fed cuts rates AGAIN that is going to weaken the dollar a whole lot more and inflation will kill the economy even more. It's like beating a dead horse.
The Fed is between a rock and a hard spot with inflation on one side and recession on the other. Get ready for a recession...in 2009. We are going to have to pick our poison on this one. Which is the lesser of the two evils, Inflation or Recession?
Also I'm no economist or analyst but if the Fed stopped lower interest rates to stave off a recession and started raising it to stop inflation and to strengthen the dollar again what would be the ramification of this? Recession for how long? And what else?
The rate cuts aren't going to help as much as they did the last time because ... the last recession rate cuts spawned the housing boom which, in turn, spawned the subprime crisis ...
Plus ... the rate cuts aren't going to do anything to ease the credit crunch. Until people are convinced they will be paid back ... they won't lend money no matter how low the interest rates are.
What the Fed really needs to do is regulate the lending industry and build confidence in the system again.
Falling asset values (deflation) coupled with monetary and necessary consumer goods inflation. Those who are clever enough to leave the dollar will get real estate, cars, boats, and other assets for pennies on the dollar when they repatriate. Those who don't have the means will have their savings stripped away. Any additional liquidity provided by the Fed will likely not get rerouted to hopelessly indebted Americans, but rather to commodities, oil, gold, and other similar asset classes.
No, do NOT regulate capitalism. The problem is that the Fed fixed interest rates. If they weren't permitted to fix them based on market conditions, but only focused on a sound dollar, short term rates wouldn't have been 1%. The Fed is the antithesis of capitalism as they attempt to monopolize the money supply and the means at which it's valued, and they are politically motivated to do what the government nudges them to do, especially in an election year.
The likely outcome is more inflation because it funds entitlement programs, and no politician wants to be the one who isn't acting like Santa Claus. Inflation strips the elderly and responsible of their savings and socializes it to those who are indebted. Inflation is the antithesis of freedom as it enslaves you to continue working after your hard earned money evaporates in value and is funneled into the welfare state.
Last edited by ViewFromThePeak; 02-20-2008 at 11:08 AM..
The FED is in a very difficult position-inflation is running too hot, they risk having inflation run stronger even if they 'stabilize' the economy later this year. They may have to drastically raise rates later this year to fend off inflation! From what I have been reading we are now in a recession- and by lowering rates again, it is far worse then the FED wants to admit without causing a financial panic.
Gasoline rose here in my Connecticut locality from $3.08 a gallon to $3.21 in one day! What is that going to do for inflation down the road? Yow! It might be conservative to say that $3.75 a gallon by May is not at all impossible.
Gold is over $940 an oz, as a flight to safety in times of rising prices.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
that is going to weaken the dollar a whole lot more and inflation will kill the economy even more. It's like beating a dead horse. 
