Comments on: The Fed: Betting on a rate hike http://cnnmoneytalkback.blogs.cnnmoney.cnn.com/2008/05/14/the-fed-betting-on-a-rate-hike/ CNNMoney.com Talkback Tue, 24 Nov 2009 15:32:36 +0000 http://wordpress.com/ hourly 1 By: Michael, NYC http://cnnmoneytalkback.blogs.cnnmoney.cnn.com/2008/05/14/the-fed-betting-on-a-rate-hike/#comment-17462 Michael, NYC Fri, 04 Jul 2008 13:35:20 +0000 http://cnnmoneytalkback.wordpress.com/?p=92#comment-17462 The federal reserve should raise interest rates a quarter point at every meeting until its up to par with the European central bank. We are a nation that relies upon foreign creditors to finance our spending. Bernanke is debasing the dollar and consequently creating inflation all over the world. When the world is fed up no pun intended, they will stop holding dollars and divert their savings and investment into non dollar denominated assets. When this happens our nation will resort to printing money out of thin air to pay bills like Argentina and Weimar's Germany. Don't be fool by foreign fund investments. Foreigners are buying up our assets b/c they want to get rid of their dollar holdings and exchange for hard assets. Once thats over, companies will not find capital so easily. Bernanke had to bail out Bear sterns to prevent the Pandora's box from opening. What's in the box? $ 500 trillion worth of derivatives. Which company has the most, you guess it JP Morgan $90 trillion. The fed is in a catch 22. His options, control inflation through raising rates. Or rescue wall street at the expense of main street. He has chooses the latter but not for long. When stagflation and hyperinflation rears its ugly head, he has no choice but to raise rates. When he does, expect more bubbles to burst; commercial property, credit card, car loan, student loan, derivative market, and lastly bonds. The federal reserve should raise interest rates a quarter point at every meeting until its up to par with the European central bank. We are a nation that relies upon foreign creditors to finance our spending. Bernanke is debasing the dollar and consequently creating inflation all over the world. When the world is fed up no pun intended, they will stop holding dollars and divert their savings and investment into non dollar denominated assets. When this happens our nation will resort to printing money out of thin air to pay bills like Argentina and Weimar’s Germany. Don’t be fool by foreign fund investments. Foreigners are buying up our assets b/c they want to get rid of their dollar holdings and exchange for hard assets. Once thats over, companies will not find capital so easily. Bernanke had to bail out Bear sterns to prevent the Pandora’s box from opening. What’s in the box? $ 500 trillion worth of derivatives. Which company has the most, you guess it JP Morgan $90 trillion. The fed is in a catch 22. His options, control inflation through raising rates. Or rescue wall street at the expense of main street. He has chooses the latter but not for long. When stagflation and hyperinflation rears its ugly head, he has no choice but to raise rates. When he does, expect more bubbles to burst; commercial property, credit card, car loan, student loan, derivative market, and lastly bonds.

]]> By: karen smith, houston texas http://cnnmoneytalkback.blogs.cnnmoney.cnn.com/2008/05/14/the-fed-betting-on-a-rate-hike/#comment-17335 karen smith, houston texas Tue, 24 Jun 2008 14:04:04 +0000 http://cnnmoneytalkback.wordpress.com/?p=92#comment-17335 Of course the Fed should raise interest rates I say move them up to 9 percent right away. That way people would be putting more money into savings as it will at least then keep up with inflation. Of course the Fed should raise interest rates I say move them up to 9 percent right away.

That way people would be putting more money into savings as it will at least then keep up with inflation.

]]> By: Charlie, Wall, NJ http://cnnmoneytalkback.blogs.cnnmoney.cnn.com/2008/05/14/the-fed-betting-on-a-rate-hike/#comment-17224 Charlie, Wall, NJ Mon, 16 Jun 2008 14:32:44 +0000 http://cnnmoneytalkback.wordpress.com/?p=92#comment-17224 No, the "Federal" Reserve should not raise rates. As a matter of Constitutional fact the "Federal" Reserve should not even be the nation's money supplier. The US Treasury under supervision of Congress should be in charge of our then would be debt free monetary system. Look it up: Article 1, Section 8, paragraph 5, US Constitution. No, the “Federal” Reserve should not raise rates. As a matter of Constitutional fact the “Federal” Reserve should not even be the nation’s money supplier. The US Treasury under supervision of Congress should be in charge of our then would be debt free monetary system. Look it up: Article 1, Section 8, paragraph 5, US Constitution.

]]> By: karen smith, houston texas http://cnnmoneytalkback.blogs.cnnmoney.cnn.com/2008/05/14/the-fed-betting-on-a-rate-hike/#comment-16453 karen smith, houston texas Tue, 27 May 2008 22:03:37 +0000 http://cnnmoneytalkback.wordpress.com/?p=92#comment-16453 Posted By Ben, Buffalo, NY : May 20, 2008 3:56 pm Quote "When the Fed lowers interest rates, the money supply is increased. This, by definition, is inflation. The increased supply of money devalues the US dollar, which decreases our purchasing power relative to other nations. This accounts for a huge portion of increased oil prices. Inflation has *everything* to do with interest rates. " I have a totally opposite view of inflation and basically it's the view that the higher interest rates are the more people have to charge for items to stay in business and pay for the higher costs of borrowed money. Hence high interest rates leds to high inflation for things we buy everyday. I think if you look at historical data this will bare me out. During 2001 to 2006 we had almost no inflation in the price of goods as the interest rate got down to 1 percent. As soon as the Fed started to raise rates inflation took off and now we pay 12 percent a year more from inflation. Now where people believe inflation comes from low interest rates is different than the inflation people pay when they buy something. The low interest rates we had caused the dollar to lose 50 percent of it's value relative to the euro from 1999 to 2008. But had little or nothing to do with real inflation that people paid for things. The fact is China produces goods so cheap even if shoes doubled in price from 5 dollars to 10 dollars a pair NIKE over here will still make 90 dollars a shoe instead of 95 dollars a shoe and just live with a reduced profit margin as they are better off than they where before CHINA when they made a shoe for 40 dollars and sold it for 60 dollars and only made 20 dollars on it. Posted By Ben, Buffalo, NY : May 20, 2008 3:56 pm Quote “When the Fed lowers interest rates, the money supply is increased. This, by definition, is inflation. The increased supply of money devalues the US dollar, which decreases our purchasing power relative to other nations. This accounts for a huge portion of increased oil prices.

Inflation has *everything* to do with interest rates. ”

I have a totally opposite view of inflation and basically it’s the view that the higher interest rates are the more people have to charge for items to stay in business and pay for the higher costs of borrowed money. Hence high interest rates leds to high inflation for things we buy everyday.

I think if you look at historical data this will bare me out. During 2001 to 2006 we had almost no inflation in the price of goods as the interest rate got down to 1 percent. As soon as the Fed started to raise rates inflation took off and now we pay 12 percent a year more from inflation.

Now where people believe inflation comes from low interest rates is different than the inflation people pay when they buy something. The low interest rates we had caused the dollar to lose 50 percent of it’s value relative to the euro from 1999 to 2008. But had little or nothing to do with real inflation that people paid for things.

The fact is China produces goods so cheap even if shoes doubled in price from 5 dollars to 10 dollars a pair NIKE over here will still make 90 dollars a shoe instead of 95 dollars a shoe and just live with a reduced profit margin as they are better off than they where before CHINA when they made a shoe for 40 dollars and sold it for 60 dollars and only made 20 dollars on it.

]]> By: Ben, Buffalo, NY http://cnnmoneytalkback.blogs.cnnmoney.cnn.com/2008/05/14/the-fed-betting-on-a-rate-hike/#comment-15018 Ben, Buffalo, NY Tue, 20 May 2008 19:56:11 +0000 http://cnnmoneytalkback.wordpress.com/?p=92#comment-15018 Miguel Gomez, Ph.D? Something tells me his Ph.D is not in economics, because everything he said is inaccurate. Oil is not driving inflation...it's the other way around! When the Fed lowers interest rates, the money supply is increased. This, by definition, is inflation. The increased supply of money devalues the US dollar, which decreases our purchasing power relative to other nations. This accounts for a huge portion of increased oil prices. Inflation has *everything* to do with interest rates. The Fed needs to keep interest rates low so the housing market can recover? The market will never "recover", because prices were artifically high, thanks to a longstanding inflationary Fed policy. The US consumer needs to regain confidence?? What the hell does that even mean? The US consumer is out of money, because they over-leveraged themselves and showed zero financial discipline over the past 20 years. Everyone is to blame for our current situation. Our entire goverment since the 80's, Greenspan's Fed, our citizens, wall street. Everyone. Miguel's ignorance is typical of Univeristy professors in this country. Go back to your ivory tower, Doctor. Miguel Gomez, Ph.D? Something tells me his Ph.D is not in economics, because everything he said is inaccurate. Oil is not driving inflation…it’s the other way around! When the Fed lowers interest rates, the money supply is increased. This, by definition, is inflation. The increased supply of money devalues the US dollar, which decreases our purchasing power relative to other nations. This accounts for a huge portion of increased oil prices.

Inflation has *everything* to do with interest rates.

The Fed needs to keep interest rates low so the housing market can recover? The market will never “recover”, because prices were artifically high, thanks to a longstanding inflationary Fed policy. The US consumer needs to regain confidence?? What the hell does that even mean? The US consumer is out of money, because they over-leveraged themselves and showed zero financial discipline over the past 20 years.

Everyone is to blame for our current situation. Our entire goverment since the 80’s, Greenspan’s Fed, our citizens, wall street. Everyone.

Miguel’s ignorance is typical of Univeristy professors in this country. Go back to your ivory tower, Doctor.

]]> By: Kitty, BC, NV http://cnnmoneytalkback.blogs.cnnmoney.cnn.com/2008/05/14/the-fed-betting-on-a-rate-hike/#comment-13895 Kitty, BC, NV Thu, 15 May 2008 04:21:53 +0000 http://cnnmoneytalkback.wordpress.com/?p=92#comment-13895 Raising interest rates could help strengthen the dollar (not exactly a bad thing). Raising interest rates could help strengthen the dollar (not exactly a bad thing).

]]> By: Michael, NY, NY http://cnnmoneytalkback.blogs.cnnmoney.cnn.com/2008/05/14/the-fed-betting-on-a-rate-hike/#comment-13894 Michael, NY, NY Thu, 15 May 2008 02:40:42 +0000 http://cnnmoneytalkback.wordpress.com/?p=92#comment-13894 Inflation is eating away our earnings with the current federal reserve policy. he is debasing the dollar hoping to rescue wall street and increasing exports. In the mean time creating inflation and down playing it's existence. Most American like myself don't believe the government phony numbers for inflation. Austrian economics teaches us you can't simply print your way out of what is fundamentally flawed and broken. This nation and everyone in it is drowning in debt. It is not sustainable and we are witnessing the first tide of correction. What the fed and congress are doing is delaying the recovery. before the bulk of the baby boomer due to retire we must get our house in order. Reducing our spending overseas is a start. Inflation is eating away our earnings with the current federal reserve policy. he is debasing the dollar hoping to rescue wall street and increasing exports. In the mean time creating inflation and down playing it’s existence. Most American like myself don’t believe the government phony numbers for inflation. Austrian economics teaches us you can’t simply print your way out of what is fundamentally flawed and broken. This nation and everyone in it is drowning in debt. It is not sustainable and we are witnessing the first tide of correction. What the fed and congress are doing is delaying the recovery.
before the bulk of the baby boomer due to retire we must get our house in order. Reducing our spending overseas is a start.

]]> By: Corey Larson, Winchester Hills Utah http://cnnmoneytalkback.blogs.cnnmoney.cnn.com/2008/05/14/the-fed-betting-on-a-rate-hike/#comment-13893 Corey Larson, Winchester Hills Utah Thu, 15 May 2008 00:57:13 +0000 http://cnnmoneytalkback.wordpress.com/?p=92#comment-13893 Please give us a chance, leave the rates unchanged. All the asian economies have low rates, and have had for years. Our economy is suffering because the Fed interfered with the markets to burst a bubble, the Bush Administration has spent Trillions on inflationary programs such as the Iraq war, military, homeland security, and boarder control, all these programs added dollars to the ecomony, but not additional production capacity for goods and services available for purchase by the public or for export. Therefore, we have more dollars chasing the same amount of goods, which causes inflation. What about the failed energy policies of our great Nation? We are driving autos that require $400 Billion Dollars to leave our economy each year-----time for electric and hydrogen vehicles. The GOP is going to be hurting this fall, unless they address the real problems with our economy. The public needs to get educated and learn the truth. Please give us a chance, leave the rates unchanged. All the asian economies have low rates, and have had for years.

Our economy is suffering because the Fed interfered with the markets to burst a bubble, the Bush Administration has spent Trillions on inflationary programs such as the Iraq war, military, homeland security, and boarder control, all these programs added dollars to the ecomony, but not additional production capacity for goods and services available for purchase by the public or for export. Therefore, we have more dollars chasing the same amount of goods, which causes inflation.

What about the failed energy policies of our great Nation? We are driving autos that require $400 Billion Dollars to leave our economy each year—–time for electric and hydrogen vehicles.

The GOP is going to be hurting this fall, unless they address the real problems with our economy. The public needs to get educated and learn the truth.

]]> By: lmr concord nh http://cnnmoneytalkback.blogs.cnnmoney.cnn.com/2008/05/14/the-fed-betting-on-a-rate-hike/#comment-13892 lmr concord nh Wed, 14 May 2008 23:42:57 +0000 http://cnnmoneytalkback.wordpress.com/?p=92#comment-13892 The Fed should raise rates. Congress should look into whether the money the Fed has been lending to investment banks has been used to buy commodity futures, and in turn drive up the cost of fuel and food. Keep in mind that trading derivatives is an area of expertise for investment banks. The Fed should raise rates.

Congress should look into whether the money the Fed has been lending to investment banks has been used to buy commodity futures, and in turn drive up the cost of fuel and food. Keep in mind that trading derivatives is an area of expertise for investment banks.

]]> By: Mariah, Washington http://cnnmoneytalkback.blogs.cnnmoney.cnn.com/2008/05/14/the-fed-betting-on-a-rate-hike/#comment-13889 Mariah, Washington Wed, 14 May 2008 19:55:56 +0000 http://cnnmoneytalkback.wordpress.com/?p=92#comment-13889 Who cares about the presidential race... what about the human race. Yes let's get the rate raised and make our money worth something again. Who cares about the presidential race… what about the human race. Yes let’s get the rate raised and make our money worth something again.

]]> By: Carmen, Tallahassee, FL http://cnnmoneytalkback.blogs.cnnmoney.cnn.com/2008/05/14/the-fed-betting-on-a-rate-hike/#comment-13888 Carmen, Tallahassee, FL Wed, 14 May 2008 19:49:03 +0000 http://cnnmoneytalkback.wordpress.com/?p=92#comment-13888 Please raise the rates. I am also concerned about my savings. We need to make the dollar stronger, and not worry about low rate mortgages for people that should not be buying a home to begin with. Please raise the rates. I am also concerned about my savings. We need to make the dollar stronger, and not worry about low rate mortgages for people that should not be buying a home to begin with.

]]> By: Todd, Rocky Hill, CT http://cnnmoneytalkback.blogs.cnnmoney.cnn.com/2008/05/14/the-fed-betting-on-a-rate-hike/#comment-13887 Todd, Rocky Hill, CT Wed, 14 May 2008 19:35:31 +0000 http://cnnmoneytalkback.wordpress.com/?p=92#comment-13887 Please raise the rates. I am more concerned about inflation making my savings being worth less than my desire for getting a low rate on a loan. Wasn't this whole mess caused by borrows getting low rates on homes they couldn't afford. Loans being made by brokers that didn't care about repayment because the broker would just sell the loan and have no concern of the consequences of a default. A home of your own is the American Dream, not a right. Not everyone can own a home. Two rate decreases back the vote to lower the rate was not unanimous. I was surprised the last increase passed. Shore up the dollar. The Fed is not about politics, but for the good of the country. Don't wait for October. Please raise the rates.
I am more concerned about inflation making my savings being worth less than my desire for getting a low rate on a loan.
Wasn’t this whole mess caused by borrows getting low rates on homes they couldn’t afford. Loans being made by brokers that didn’t care about repayment because the broker would just sell the loan and have no concern of the consequences of a default. A home of your own is the American Dream, not a right. Not everyone can own a home.

Two rate decreases back the vote to lower the rate was not unanimous. I was surprised the last increase passed.
Shore up the dollar. The Fed is not about politics, but for the good of the country. Don’t wait for October.

]]> By: Mary, Austin TX http://cnnmoneytalkback.blogs.cnnmoney.cnn.com/2008/05/14/the-fed-betting-on-a-rate-hike/#comment-13886 Mary, Austin TX Wed, 14 May 2008 19:34:50 +0000 http://cnnmoneytalkback.wordpress.com/?p=92#comment-13886 Should the country and the economy be on hold during a presidential race? We still eat, drink, work during that time. Why should the Fed holds its breath? Would the result change their decision? Should the country and the economy be on hold during a presidential race? We still eat, drink, work during that time. Why should the Fed holds its breath? Would the result change their decision?

]]> By: Steven Rosner, Norwalk, CT http://cnnmoneytalkback.blogs.cnnmoney.cnn.com/2008/05/14/the-fed-betting-on-a-rate-hike/#comment-13885 Steven Rosner, Norwalk, CT Wed, 14 May 2008 19:32:21 +0000 http://cnnmoneytalkback.wordpress.com/?p=92#comment-13885 How many times do people have to people have to get spanked before they recognize that keeping rates at ridiculously low levels for extended periods of time leads to bad things. First of all, rates are not going to help the housing market. In the 80's we had a massive real estate bubble and interest rates were DOUBLE DIGITS! Bubbles like this are psychological. Every generation needs to learn a lesson. I bought my house in exclusive Fairfield County CT in 1988 during the last bubble and in the year 2000 it was still worth 10% LESS than what I had paid for it. That's 12 years of dead money. I love the CPI numbers. Inflation not so bad huh? What a joke. They've constructed the inflation metrics in such a way that they will ALWAYS understate the true picture. If the numbers showed the true inflation rate, cost of living adjustments in pension plans and social security would sykrocket. Not something the government wants to see. That's why it's a lie. As others here have pointed out, THIS is closer to a normal housing market than 2005 was. THAT was the abberation. How many times do people have to people have to get spanked before they recognize that keeping rates at ridiculously low levels for extended periods of time leads to bad things. First of all, rates are not going to help the housing market. In the 80’s we had a massive real estate bubble and interest rates were DOUBLE DIGITS! Bubbles like this are psychological. Every generation needs to learn a lesson. I bought my house in exclusive Fairfield County CT in 1988 during the last bubble and in the year 2000 it was still worth 10% LESS than what I had paid for it. That’s 12 years of dead money. I love the CPI numbers. Inflation not so bad huh? What a joke. They’ve constructed the inflation metrics in such a way that they will ALWAYS understate the true picture. If the numbers showed the true inflation rate, cost of living adjustments in pension plans and social security would sykrocket. Not something the government wants to see. That’s why it’s a lie. As others here have pointed out, THIS is closer to a normal housing market than 2005 was. THAT was the abberation.

]]> By: Whit, Chicago illinois http://cnnmoneytalkback.blogs.cnnmoney.cnn.com/2008/05/14/the-fed-betting-on-a-rate-hike/#comment-13884 Whit, Chicago illinois Wed, 14 May 2008 19:30:35 +0000 http://cnnmoneytalkback.wordpress.com/?p=92#comment-13884 Absolutely raise rates NOW adn again several times before the election. Credit has been far to easy! To many people bought homes that they could never afford and why are taxpayer bailing them and the lenders out? If one cannot afford the house, car, kids etc, quit asking me to pay for your sorry financial shape and decisions. low intreest rates are killing teh US economy. Oil/credit cardsetc are all affected.. So raise them NOW. Absolutely raise rates NOW adn again several times before the election. Credit has been far to easy! To many people bought homes that they could never afford and why are taxpayer bailing them and the lenders out?
If one cannot afford the house, car, kids etc, quit asking me to pay for your sorry financial shape and decisions.
low intreest rates are killing teh US economy. Oil/credit cardsetc are all affected.. So raise them NOW.

]]> By: Mike, Redwood City, CA http://cnnmoneytalkback.blogs.cnnmoney.cnn.com/2008/05/14/the-fed-betting-on-a-rate-hike/#comment-13883 Mike, Redwood City, CA Wed, 14 May 2008 19:10:37 +0000 http://cnnmoneytalkback.wordpress.com/?p=92#comment-13883 No. The Fed should hold exactly where they are (with the Fed funds rate at 2.0%, equal to the core PCE), and go no lower. The Fed should continue to hold until the core PCE rises or until GDP growth greatly exceeds 2% (some say 4%), when they will need to start reining in the inflation rate, again. Housing is a whole different beast, only vaguely related to the Fed, and it should be allowed to reprice its way down to affordability over the next 4 or so years. No. The Fed should hold exactly where they are (with the Fed funds rate at 2.0%, equal to the core PCE), and go no lower. The Fed should continue to hold until the core PCE rises or until GDP growth greatly exceeds 2% (some say 4%), when they will need to start reining in the inflation rate, again.

Housing is a whole different beast, only vaguely related to the Fed, and it should be allowed to reprice its way down to affordability over the next 4 or so years.

]]> By: wnowack, Leawood, KS http://cnnmoneytalkback.blogs.cnnmoney.cnn.com/2008/05/14/the-fed-betting-on-a-rate-hike/#comment-13882 wnowack, Leawood, KS Wed, 14 May 2008 18:57:19 +0000 http://cnnmoneytalkback.wordpress.com/?p=92#comment-13882 I am sure the Fed will act with political instincts which match its economic instincts in managing the economy. Look out! I am sure the Fed will act with political instincts which match its economic instincts in managing the economy. Look out!

]]> By: wnowack, Leawood, KS http://cnnmoneytalkback.blogs.cnnmoney.cnn.com/2008/05/14/the-fed-betting-on-a-rate-hike/#comment-13881 wnowack, Leawood, KS Wed, 14 May 2008 18:50:03 +0000 http://cnnmoneytalkback.wordpress.com/?p=92#comment-13881 I agree wholeheartedly with the first recommendation by Thad Schiele; the Fed is guilty of gross non-performance of its duties and doing things it is not authorized to do. With regard to the second one, the economists (with the exception of the liars who publish the negligible inflatiion rates) ddo do their jobs; it is the political appointees who did and do not. I agree wholeheartedly with the first recommendation by Thad Schiele; the Fed is guilty of gross non-performance of its duties and doing things it is not authorized to do. With regard to the second one, the economists (with the exception of the liars who publish the negligible inflatiion rates) ddo do their jobs; it is the political appointees who did and do not.

]]> By: Oz in Kansas http://cnnmoneytalkback.blogs.cnnmoney.cnn.com/2008/05/14/the-fed-betting-on-a-rate-hike/#comment-13880 Oz in Kansas Wed, 14 May 2008 18:49:01 +0000 http://cnnmoneytalkback.wordpress.com/?p=92#comment-13880 OF COURSE the Federal Reserve should raise rates, just like they should have raised them back in 2005 when the Real Estate market went out of control! Doesn't take a rocket scientist to figure this one out!! OF COURSE the Federal Reserve should raise rates, just like they should have raised them back in 2005 when the Real Estate market went out of control! Doesn’t take a rocket scientist to figure this one out!!

]]> By: Wayne, Birmingham, AL http://cnnmoneytalkback.blogs.cnnmoney.cnn.com/2008/05/14/the-fed-betting-on-a-rate-hike/#comment-13879 Wayne, Birmingham, AL Wed, 14 May 2008 18:35:52 +0000 http://cnnmoneytalkback.wordpress.com/?p=92#comment-13879 Yes. They should start inching the rates up slowly. Those of us who try to save instead of borrowing for everything we (plan to) own are suffering with anemic returns. Americans need to learn that you must earn what you posess. Our enormous debt is an enormous problem. Yes. They should start inching the rates up slowly. Those of us who try to save instead of borrowing for everything we (plan to) own are suffering with anemic returns. Americans need to learn that you must earn what you posess. Our enormous debt is an enormous problem.

]]>