A Low Fed Interest Rate - Page 2

Defensor · 06-28-2008, 01:39 PM

Quote:

Originally Posted by Nerv14

As Allan Greenspan said, politicians look for immediet approval from fed activity, when in reality fed activity is about long term results. Regardless if we trust him or not, I want to hear both sides of the story.

Yes, Fed activity is about long-term destruction. Even a small rate of inflation is poison for a nation's economy in the long run.

michaelr · 06-28-2008, 01:42 PM

Quote:

Originally Posted by Grez

Look, low interests rates are good for businesses, and that is IT. Lower interests rates are good for the general consumer at a point, but that point passed once it went lower than around 4-5%. The only 2% rate anyone gets regularly is a money market or a CD, and that sucks. Otherwise, unless a credit card gimmick, you don't get that rate. Meanwhile, the dollar loses bigtime value on the world market, as we have seen. Th dollar was well overvalued a few years ago. We've seen a steady decline over the past three years or so. The dollar started dropping over a year ago, alone, because of its overvalue. Then the housing crisis came upon, then higher oil, then possible recession, then slightly higher unemployment. In the meantime, the Fed has been dropping interest rates, which makes the dollar even more worthless. The main reason your paying 4+ dollars at the pump is highly related to the massive interest rate drops made by the Fed to help businesses correct their own foolish mistakes. And there ain't a thing anyone of us can do about it.

If I were you I would take a real hard look at the economy, then rethink your post.

william the wierd · 06-28-2008, 04:43 PM

The fact of the matter is that lower interest rates are useless since home equity lenders and credit card issuers keep dropping debt limits. About 15-20% of the population is in danger of going seriously underwater and they are the major users of CC, home equity and retirement account borrowing to stay above water. As those sources get tapped out payday advances and car title loans will be tapped.

Jim Crammer recently claimed that in about 9 months the right time to buy homes will roll around. In terms of flipping or buying rentals I agree but since the effects of the 1926 FL real estate bubble persisted at least until Jackie Gleason moved his show to Miami I don't think much real money property appreciation will be seen again for at least 30 years. LA, SF and Vegas especially will go into eclipse for upto 30 years. NY and Miami have much more experience with real estate downturns and have the infrastructure in place to turn things around much faster. Since Crammer lives and works in greater NY I think he is assuming social infrastructure that simply doesn't exist west of the Mississippi for most urban areas nor in New England.

Interest rate cuts only work if social and financial infrastructure is in place and most of the heavily hit places lack these tools.