Fed Ready to Cut Rates Again

There's a load of bad news: Consumer prices have dropped 1.7% last month, housing starts have dropped 18.9% ("the lowest since the government started compiling statistics in 1959"), Best Buy is offering workers voluntary severance to most of its corporate workers... Which means the Federal Reserve is poised to cut interest rates again. It's believed the Fed will cut 50 basis points from the base rate, which would then be 0.5%. CNBC reports, "Market watchers are hoping the Fed will signal quantitative easing measures, which essentially involves printing more money, to restore growth and signal an end to the ongoing recession."

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By Jen Chung in News on December 16, 2008 8:55 AM

Comments [rss]

inoyourider

Hope the 30 yr refi goes to 4.5

Help the people who need it

Fuck the banks and the scumbags who run them

Bottomless Chips

And so, the rich get richer. Yay, capitalism!

The Fed manipulating interest rates is not capitalism.

SP

And so, the rich get richer. Yay, capitalism!

Felix Hoenikker

Inflation devalues existing savings to the point of discouraging saving. Cheap/free credit creates bubbles and encourages spendthrift investments/purchases.

We need a 'lost decade'. The fed f'ing with the market is a bad thing.

TK

Deflation in commodity prices is a good thing if your income doesnt decrease by a greater proportion. The biggest concern I have is still the continued liquidity being pumped into the system. I think I'm turning Japanese.

NannyState

..And the markets are higher. All these short term rallies are just traders manipulating the room to entice long term investors only to sell them out and salt away another 5% weelky profit. This Lucy with the football game is getting old and as the suckers burn out, we're going to begin to see the real complexion of Wall Street. (Hint, it ain't pretty)

starrygordon

Deflation is bad, but if the inflationary bubbles created in real estate and the stock market by Greenspan's policy of printing money -- actually, creating unbacked credit -- aren't deflated, they will spread to the rest of the economy. Modern economies run on trust; if you want trust you have to have fairly hard money. The current attempt of the Fed to reinflate the bubbles is a mistake. Sooner or later the economy has to be corrected and the longer it's put off the more painful it will be.

Giving funny money to the rich is particularly unlikely to do any good since they will waste it on rich people's games anyway. If money must be strewn around, at least give it to working people to produce something we can use.

Jen Chung

Why deflation is bad:

http://www.reuters.com/article/ousiv/idUSTRE4BE63H20081215

bellafarfalla

Maybe I'm missing something, but isn't it good that consumer prices are dropping? If they kept rising, people would buy even less than they already do.