The Fed may be done – Get over it

excessive rate cuts do only one thing…feed inflation.

The recent rate cuts and emergency steps taken by the Fed are just examples of the banks helping themselves. These steps and cuts do nothing to help consumers or the people facing foreclosures. If you’ve noticed, interest rates on mortgages have risen and will continue to rise. Until the government holds the Fed and their banks responsible for they’ve done, things are only going to get worse.

Personally I would give Bernanke an A for his actions in helping avert a major crisis. I think he started off slowly and realized the credit crunch was getting worse and ramped up efforts to get things in the proper perspective. Banks are in the business of lending money, thats their only product–to lend. If the stop lending, the country and the world stops, we need lower rates to grease the gears of this credit crunch and everything else will work itself out. Wall Street didn’t need a bailout, the economy did. Who do you think buys all of the mortgages, investors do

The cycles are almost transparent by now. Alan Greenspan lowered the interest rates until he had no where to go but up and the rate made it up to around the 5 percent area then it was time to switch gears again and down we go. With Ben B at the controls it looks like something changed, but did it really? At 2.25 percent we are near bottom again and it is not working. This country is in trouble and setting on the edge of a panic. I think it is all a ploy to destroy our money and set us up for a switch to a new money the government wants to call the Amero. Our money is currently not backed by anything of value, not silver, not gold. Our government just keeps printing more and more paper money with only a value because we are willing to keep using it and trading it for goods and services. When other countries no longer want to accept our money for goods and request Euro’s instead that should be a wake up call for us, but so far it looks like business as usual to me. I don’t know enough about the Euro to be sure if it was just a test to see what the public reaction to a complete change and a NEW DIRECTION would be. If it was indeed a test then by all measures it worked and met with little resistance. I think the Fed should not have lowered the interest rate and we should start over again and stock pile gold to back our money. At $1000.00 an ounce a few thousand tons should at least be a great start. Now with that problem solved how do we get the government to stop giving our money by the millions or is it up to billions now to other countries. They have their problems and we certainly have ours without giving our money away. Here we sit waiting for the other shoe to drop. What is next, I wish I knew.

For those who, like myself, lack the time to genuinely study the science of economics, here’s a brief explanation of Federal policy:

“The boat is sinking, the boat is sinking!”

“Quick, shoot another hole in the bottom so the water can drain out!”

Thank you, I hope that clears things up.

As you may have noticed, these rate cuts only work for an afternoon anyway, and it’s becoming pretty obvious that this Emperor is running out of clothes. Wouldn’t it be nice if we could take a few measures to avoid getting into this sort of mess in the first place? Something like the Glass-Stegall act, created after an analysis of what went wrong in ‘29? Oh, right — as pointed out elsewhere on this site a couple of days ago, this was repealed nine years ago, sowing the seeds for the current mess. If you disable the safety devices, then sooner or later, it’s going to blow up in your face, as in Chernobyl. Roll over, Satayana!

Talk about how bad FED policy is one thing and what financial decisions all of us making is another. We all have to sacrifice to stop spending what we don’t have, so the demand will be lower and inflation will be down. What FED is doing is the opposite to encourage more spending and more inflation by lowering the rates, which causes massive debts to a point this nation’s financial system will be crippled. One thing is good for a weak dollar the US government is not telling is that US can effectively walk away from huge treasure debt held by foreign countries, like China and Japan, because they loan money to US in dollars and a weak dollar means US can use their (foreign) currencies to buy back a lot more dollars to pay them back. Is that a good deal?

Ben Bernanke is a brilliant man unlike his senile predecessor.

Much of the damage to the economy was caused by loose monetary policy followed by Bubble Maestro Greenspan, Ben Bernanke needs to reverse the damage first.. A potential collapse of the financial sector is more damaging than inflation or a weak dollar.The situation was further exacerbated by the abuses and excesses of successive Republican Administrations which spent recklessly on military buildups and misadventures while reducing taxes on the superrich. We now have income inequalities that compare with France and Russia before revolution.

We need to sharply hike taxes on incomes over $ 500,000 a year, commence public works and reduce dependence on just monetary policies which have contributed heavily to the disaster.Abdication of responsibility as a Banking Sector regulator by the senile Greenspan made problems much worse.

It’s time to get the hell out of Iraq and stop giving our money to every other country and develop our own energy independence. Just think how much better off we’d be if we spend that 500 billion in our own country.

I’m tired of people painting a picture that the economy is going down the tubes because of the debt. The debt represents about 38% of the GDP. Well within reasonable limits and it’s in fact better than many times in the past including after WWII. Right now, the strategy is to try to expand the GDP so the debt is even less relative. Although, rate cuts aren’t the way to increase GDP this time around and the Fed is only hurting the middle-class.

The only way to save our dollar and our country is if every AMERICAN burned a $10 bill, but not before we got rid of the Federal Reserve all together

So the fed cuts interest rates again and what has it accomplished? One day big up day on wall street. The dollar is further weakened. Many people who have been responsible savers have had their savings cut again. Another excample of our instant gratification society.

A dollar, should be a dollar, should be a dollar… It’s that simple. This oligarchy has made a total mess of civilization during their reign of absolute poser over the past century. Mankind is going to face multiple tectonic stresses (over population, the depletion of cheap energy, desertification, food and water shortages due to climate change, et. al.) over the upcoming century that will test humanities resolve to cooperate rather than compete. Capitalism’s invisible hand has led us to an obvious grave. It’s a sad thing to witness. We need to adopt an entirely new economic system. I’ve tried my best to instill in those I meet that if you give an hour of labor to your community you should be entitled to an hour back. No more, no less. This whole concept of I’m better than you has led us down a path wherein we no longer respect any living things. And since hardly anyone is willing to make even the smallest of sacrifices for the common good, it’s basically game over folks! Mankind is not going to rise to the challenge. I’m relatively old at 57 and have had a great life. I really feel for the young generations. I know I was duped for the better part 40 years. This isn’t going to be a pretty sight to watch. And we could start by abolishing the cartel we call “the Fed”. Talk about people do unnecessary work! Anyway, have a great day!

I can’t believe that we have continually bailed out the sectors who, in all reality are responsible for this mess. We need to stabilize the dollar and start worrying about how we can prep for an era of post-peak oil. Its time we start generating real, sustainable value in America instead of worrying about being in the business of selling ridiculous securities.

Let’s see last Monday the Feds had 200 billion dollars to loan because they could not find buyers for 180 billion in new issue Treasury bills. Let’s see who is going to buy T-bills knowing that the dollar will be less next week then the interst the T-bill will make in a week. Everyone who buys T-bills will be losing money to the falling dollar and when you add in inflation and taxes you will be even more at a loss.

So just how is the government going to fund the trillions of dollars in T-bills coming due in the next year?

It’s game over for the U.S.A. economy and our wealth. We have lost in the past 4 years that which took us 230 years to get.

The market had it’s biggest rally in 5 years! The Fed’s move MUST have been right? WRONG! Traders trading for trading sake – what a joke! Probably give back most of their pitiful gains today. ” I got a bad feelin’ about this….”

Lowering interest rates to stimulate the economy is nothing new. Chairman Greenspan done the same after the tech bubble creating the current housing bubble. Winston Churchill once said the further you look in the past the farther you can see in the future. History repeats itself because we fail to learn and correct from our mistakes.
Don’t let the commentators fool you, the current crisis is unavoidable and is the worst since the depression of the 1930’s. We are drowning of enormous debt found in all levels of society. Remember our economy, two thirds of it depend on consumer spending. This type of economy is weak and unsustainable. The recent attempts of the federal chairman and government to postpone or rectify this predicament is making matters worse. They got the printing presses in overdrive while destroying our savings and currency. We must begin the process of living within our means and rebuilding the economy. The tainted seeds we planted long ago begins to surface. It is a shame we defame and damage this country to this extent. We have left a mess for our children to clean up. They will bear higher taxation, hyperinflation, recession with stagflation, devalue currency, high unemployment, rise in crime and lower standard of living for decades to come. The longer we refuse to face the reality, the more severe this correction can be.

Recessions build our economic health just as common colds build our immune system.
Its time to turn the tide from “I want it all and I want it now” to “a penny saved is a penny earned”.
There is no better way for that to happen than to have real people experience real need that will cause them to change the culture of living on credit.
Culture throughout our society has moved from building a future for people who come after us to a campaign of scorched earth.

Given that the fed just dropped rates on Sunday, and AGAIN yesterday, I hardly see that as standing up to Wall St. In fact, they gave Wall St. more than what they wanted. I wish they’d knock it off. The Fed will do anything they can to feed cheap money into the banks and so increase the margin of profit the banks are getting off the backs of the middle class. I guess that is one way to prop up the financial institutions. Personally, I’d like to see Congress stop handing out these ridiculous “rebate” checks and instead start a New Deal type program with money for infrastructure, energy, sustainability, and transportation. Yes it will mean more money spent by the Feds (could easily pull out of Iraq to make that up, but since I don’t see that happening anytime soon) but it will create more American jobs, and more economic stability, and new industries that America can actually be proud of and produce something rather than buying everything from other countries.

Hmmm. Fed changes rules and gives free money to the big guys? Let’s see what happens when the collateral that was provided by Lehman, Citi, Goldman etc, etc blows-up in 28 days, or they request an extension, or any other scenario that can be imagined that FORCES the Fed to transfer the toxic collateral over to the care and control of the Government.

The bailout of the well-conected Wall-Streeter’s will be complete.

The Fed once again gave in to Wall Street. They should have cut at most by 50 bps. So what if Wall Street sells off for the moment.

Having other tools to add liquidity, which is what the “system” needs, lower rates do nothing for consumers (except home equity lines of credit). If anything, they have a negative impact by lowering income for folks who save and invest in CD’s and, of course, the commodities just go up raising inflation to yet higher levels.

Wake up, Bernanke…. your mandate is Main Street and supporting where Main Street banks, not Wall Street, its investment banks and the Administration.

Is the Fed also going to regulate IB’s and set capital requirements for them, now that taxpayer money is being put at risk in supporting these “high priced gamblers”?

Fed rate cuts are what started this mess. More rate cuts are not the solution. I think at best cutting rates would be like pushing on a string and at worst it would fuel another debacle like the dot com bust and the real estate bust. Because of the financial lunacies of the past ten years the US economy is a falling piano and there’s nothing you can do to catch it.

The writer suggests that Ben Bernanke did not cave to Wall Street. I believe this is inaccurate. Ben wanted the full point. The fact that there were two dissenting votes (Fisher and Plosser) indicates that a full point would have been impossible.

Don’t give Ben credit he doesn’t deserve. And these days, he deserves very little.

I think that Bernanke should stop worrying about keeping his Wall St buddies happy and givnng out get out of jail free cards. If you are a share holder in Bear Sterns do you feel good?

ANother joke is they way that the CPI is calculated; taking out food and energy. Last I checked these were things that we all had to pay for even though it may not tell the story that we want to hear it sure as hell feels real when you are paying for it.

Focus on monetary policy and fix the dollar. Let Wall Street firms that made bad bets take the heat; what happens if a small business owner does that, can we set up a special bailout fund so they can weather the storm? I think that would be a better plan than letting the self proclaimed “masters of the universe” continue to get away with out right fraud and then laughing over it at the club with helicoptor Ben and the boys.

I think he has totally blown it and should be thrown out.

Thoughtfully,

The fed should not even be cutting the rates! Each time the have cut, they have bailed out Wall St and their investors all while damaging the ultimate consumer. As a mortgage broker we have seen lenders add on additional pricing adjustments to your interest rates, and in fact, continually increased the rates of all conventional mortgages (including FHA). These banks, or Wall St, are all being able to cover their losses from the increased liquidity that the Fed has injected but they are not passing it on to the consumer who ultimately is the one who is going improve our economy from increased borrowering and spending. All of the Fed bailouts and the Governments “alleged” mortgage bailouts are not working, they are hurting. Thanks again Government and Fed for doing the complete opposite of what you should be doing!

I get it.HOORAY for Wall St.To hell with Main St.and what’s left of the middle class.

Sink or swim. Let the markets correct.
Enough is enough. Give aways on the US tax payers backs. Its understood that the public and the Wall street folks needs to have confidence in the “system”. The problem is the “system” is broken. Make bad choices and win, your lucky, lose and expect a bailout. CEO’s making millions, brokers making millions…let them lose millions.
Uncle Sam should loan the funds and recoup the funds with interest. No give aways! Let the markets correct….gonna happen with or without the mighty fed, they have lost control. Too many dollars chasing around too much dept. Balance the federal budget, pay off some of the national debt. 100% increase in less than 8 years. Madness. Restore confidence in the USA’s credit worthiness to the rest of the world.
Last treasury sale was a flop, typical 25% bought by overseas investors, less than 6%…they have no confidence.

RESTORE the pay as you go system.
They will gain respect for the USA again!

I am wondering from up here in Canada if all those rate cuts actually filter down to the American consumer? Sure, the bank can borrow money at near bottom rates so that they can lend it to you at much higher rates. Here in Canada our consumer credit cards stand between prime plus, all the way up to 28+ percent for department store cards. Bank cards for the run of the mill types are around 18& APR. So, I bet while the banks and traders are making $$$ off of interest rates cuts, how does that really translate into money into consumer’s pockets.

After all, if the Amercian consumer cannot afford to purchase with real cash, all that really is going to happen is that buying the way out of today’s problems will only mean more severe problems down the road.

There are so many of us lower income or “midleclass” who are struggling just to get by. For us, the rate cut means things get worse. The rate should have held or increased. Let the overinflated market correct itself. It’s clear this administration will do what it takes for the rich.

Look at a chart of rate cuts over the last couple of decades. Up and down, down and up. The volatile markets are for speculators. Stability is for investors. I guess we know who the fed caters to.

I am not pretending that oil is going anywhere but up on its own, but the current spike in commodities is looking a lot like the bubble that hit stocks in late 90’s, then housing in early “ohs”. Seems to me these bubbles indicate that there is already too much cash around looking for a home.

The up side of the fed’s actions though – the falling dollar. Oh, I hear people screaming already about how that is a bad thing – drives up prices of imported stuff. I disagree. Most Americans need good work, not wall street loose money. Until American labor is priced on a par with everyone else’s labor, work will leave the U.S.

I hope that it is over, the interest rate on my savings, checking account are getting slammed and I have a couple of CD that are going to mature during the spring/summer and if I roll them over I am not got going to get a good interest rate.

Probably the right move. The Fed does not want to add to the market volatility by making very surprising moves.

What I would like to see from the Fed is more stability (e.g. keep the current rate for 3-6 month), more information given to the markets (such that traders do not already factor in the prices a 1% drop before each fed meeting), an emphasis on the long term trends (it would be nice to hear a speech saying: we expect the rate to be 2.5% 6 month from now after which we plan to slowly rise it to 5%, the value we prefer to have in a normal economic environment) and to put more emphasis on fighting inflation (fighting inflation is a key reason why we need a fed, and, for some abstruse reasons, it was at the bottom of their list for quite a long time now).

If the Fed chairs were voted in, they should be impeached! However the President IS voted in, so maybe he should be! Paulson should also be made to pay the taxes on his stock sale when he took this job! “No Bailout” what a crock! The FED is taking on worthless $400B debt that Wall Street doesn’t even want, driving the dollar down more and shaking the foundation of the country! I feel like I’m on the receiving end of Client No.10… uh Ben!

Seems that few people want to acknowledge the relationship between Fed interest rates and oil prices. As Fed rates drop, international demand for dollar-denominated investments drops (lower rate of return) and demand for non-dollar investments rises (read, “oil”). Thus, lower interest rates = higher oil prices. We can thank Washington (red or blue, doesn’t matter) and its fiscal incompetence (driven, of course, by the lust for votes) every time we go to the gas station. Wake up, America, and tell your politicians to address the energy issues – now!

The Fed has already gone too far. Monetary policy works with a lag. Cutting 300 basis points in just a few months hardly seems like waiting for the remedy to work. Moreover Wall Street is the biggest bunch of babies on the planet. I notice none of the wall street firms that made an estimated $250 billion inprofits in 2006 are ponying-up any of that capital – no they want everyone else to bail them out.

Recently I was watching a financial show and one of the commentators nonchalantly said “well we needn’t worry about the Fed, we have Ben in our back pocket.” It would be nice if those of us on main street had the Fed at our beck and call. Hardly, what you have on main street are lots of retirees that depend on the interest from their treasury investments to tide them over. Well fat chance now.

Most importantly, take note: the crescendo of cry babies will be starting up anew very shortly. They are awfully greedy and nothing short of 1% will be enough. I would say if you make $250 billion when times are good, you should shut your big yap when things aren’t quite going your way!!!

THE FED SHOULD STOP NOW AND GIVE ALL THE SENIORS ON FIXED INCOME A BREAK

It wouldn’t matter one way or the other. Today’s investor has been spoiled too long. If the Fed cuts 1/4 they want a 1/2, if they cut 3/4 they want a point. They should just stand pat and things will work themselves out in the long run.

Personally I just can’t get over the fact the FED feels it has to rescue every bad decision Wall Street makes while it completely ignores the woes of the typical American family!

These rate cuts. along with bale outs and pumping more money into the system hurt every middle class working person in this country by devaluating the dollar! Secondly these bale outs cost you and I, the taxpayers of America dearly! What happens when the mortgages the FED now holds as collateral go bad? Who pays for them? Simple answer is the US taxpayers.

How about we stop taking care of the billionaires and start worrying about the average working stiff in this country Mr. Bernanke?

The Fed needs to stop cutting the rate. This isn’t a simple problem of rates being too high. People have lost confidence and lowering the rate isn’t going to impact a thing. Next we’ll be at 0% and when we need to cut the rate, we won’t be able to. The Fed needs to stop being bullied and stop spoiling Wall Street.