It has become fully clear to me that the Fed is currently in the hands of a ravenous loony, intent on the destruction of the United States dollar for his own deleterious purpose. (I couldn’t tell you what that is…but the sound-byte I heard yesterday of Donald Trump indicating he thinks we needed to cut the fed rate by a full percent or MORE…well that leaves me with the impression that the devil himself has decided it’s better to have a zero-value dollar.)
In all seriousness, when are we going to stop this ridiculous bail-out trend and just simply let this economic correction take place.
I am no economist. I can only speak from a place of casual observance. But what I see happening is the steady degradation of our currency’s value, predicated by the Fed’s handling of the current economic situation. Every-time those Fed rates decrease, our dollar is worth less in the eyes of businesses here and internationally.
Let’s be honest, Banks are businesses.
When we borrow money from banks, we are guaranteeing them a return on that interest. Unless we default. LOTS of people are defaulting on loans. LOTS of loans. The banks accepted loan applications from people that couldn’t possibly repay the loans in the long term because of the secondary securities market where banks sell the loans to each other for a portion of the expected return from the interest.
Bottom line, when the Fed cuts rates, and the stock market surges…it’s not a good thing. Contrary to the impression provided by most news sources, unless you are heavily invested in the stock market…it’s rise and fall likely has little to do with your economic standing. In fact I would argue that unless you are invested precisely in the Dow Jones Industrial Index corporations…it is a ridiculous indicator of the countries economic well being. When the United States GDP relied heavily on that particular cross-section of corporate entities, that measure was valid. Today, the economy is not so much driven by the all-mighty corporation, as it is by an indexing of the many hundred and thousands of businesses that actually PRODUCE in our country.
Ok…I am rambling now…and demotivating myself. I need to go home, drink a beer, and slaughter massive numbers of n00bs on Call of Duty 4 to relieve my stress. (I really hope that someday soon we get another “Videogames are making our kids killers” story so I can rant on that.)
CNN Money’s story: Fed Rate Cut
AFP – Interesting news about oil after we reduce interest rates: Fed Rate Cut