Fed Cut Rate another 1/2%
- Thread starter pstylesss
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Drakkon
Diamond Member
- Aug 14, 2001
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It'll be interesting to see how this effects the rates on the net savings accounts. Its almost impossible to find a place other than long term CD's where you can put money and not have it loose value due to inflation or risking it in the stock market.
palehorse
Lifer
- Dec 21, 2005
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right... and, as I understand it, mortgage rates are still hovering around 6.3% (national average).
Since this obviously doesn't effect mortgage rates at the consumer level, can you give me an example of what it does effect at the consumer level?
I'm an idiot when it comes to this stuff, so any help is much appreciated...
The dollar has gained like 30% on the Euro in the last 3 months and you still think it's "going down the tube"?
It may have an effect at super high levels like investment markets and such, but rate cuts haven't affected anything for the common man. Mortgage rates are the same at 1% that they were when the rate was 4%, earning the same interest on savings, etc. It's all a big meh now.
redgtxdi
Diamond Member
- Jun 23, 2004
- 5,464
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I wonder if/when we'll see the effect on savings/money market accounts. (The last 2 years have been like a freakin' yo-yo for those high interest online savings accounts)
And why the eff can't the fed just leave their hand off the trigger for once?? Rates are already down in the dumps and this will have net ZERO effect on mortgages (which is about the only thing that matters now) and nobody seems to be able to stand off long enough to see if ANY of these effin' actions will do anything!!!!
Note to Bernanke...............LEAVE THE EFFIN' RATES ALONE, DUDE! YOU'RE NOT DOING ANYBODY BUT WALL STREET ANY FAVORS.........(and for their own good, it's not ULTIMATELY helping them either!!!!)
And why the eff can't the fed just leave their hand off the trigger for once?? Rates are already down in the dumps and this will have net ZERO effect on mortgages (which is about the only thing that matters now) and nobody seems to be able to stand off long enough to see if ANY of these effin' actions will do anything!!!!
Note to Bernanke...............LEAVE THE EFFIN' RATES ALONE, DUDE! YOU'RE NOT DOING ANYBODY BUT WALL STREET ANY FAVORS.........(and for their own good, it's not ULTIMATELY helping them either!!!!)
And another one of the factor is how strong the economy behind the currency is and the willingness of the government to back up the economy. In this crisis mode, how safe the currency, or how strong the economy behind the currency outweigh interest rate any day.
Fern
Elite Member
- Sep 30, 2003
- 26,907
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It's not as simple as "the (fed inter-bank) interest rate goes down = decline in value of the dollar".
If the government loans banks money at a cheaper rate, and in return they loan money to us at the (higher) regular rate, what is happening?
(Banks make higher profit; the gov is pumping them up)
Either way (even if they lower rates to retail consumers) I suspect it's purpose is to inject more money into the ecnoomy for the (major) purpose of increasing demand and forstalling/minimizing any recession. People back to work, more fed/state tax revenues etc.
Unless you absolutely must buy imported goods etc, there is little-to-no reason to be concerned about the dollars strenght vis-a-vis other foreign currency. In fact, declining dollars help our manufacturing/export businesses (which have been doing very well lately) and allow us to pay off national debt to foreign countries with *cheap dollars*.
Fern
bamacre
Lifer
- Jul 1, 2004
- 21,029
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http://fora.tv/2008/10/09/Stev...at_the_Oxonian_Society
Skip to 10 minutes and pay attention. Especially starting at 13:35 and on.
Fern
Elite Member
- Sep 30, 2003
- 26,907
- 174
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Foreign currency valuation != domestic inflation.
When the dollar does devaluate relative to other currencies it does cause inflationary pressure vis-a-vis foreign goods; but does not necesarily translate into domestic inflation.
But to the extent foreign oil imports are valued in non- US currency we wil have inflationary pressures across the board for domestic products. However, the price of oil is falling so this isn't a concern now.
IMO, to restrict money supply now would be horrible, it will ensure a recession (or deepen it significantly) and likly cause deflation - stagflation.
I also think deflation would be the worst possible thing to occur now. During deflation, prices will fall, but so will wages and government revenues (lower prices, less profit and lower wages meaning less tax revenue). However, our mortgages are fixed in terms of principal, so deflation would likely cause additional forclosures; this is the last thing we need.
Defaltion will suppress stock market values (something our fed gov doesn't need considering the substantial investment in preferred stock in the finance sector), and just like with home mortgages makes national debt to foreign seem more expensive etc.
Cliffs: Deflation and recession very very bad; inflation is tolerable. Inflation is the enemy of bankers with fixed interest rate loans and those hoarding cash.
Fern
ponyo
Lifer
- Feb 14, 2002
- 19,688
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No, I mean when. You obviously don't remember when the Euro used to be the butt of the jokes like the dollar was the past couple years. Before this worldwide financial bubble the dollar was worth more than the Euro. I remember when one dollar was worth about 1.15 Euro even late as 2002. Dollar can definitely reach parity with the Euro again and more likely will.
Muse
Lifer
- Jul 11, 2001
- 40,499
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Yesterday's ~9% runup of the DOW was in anticipation of today's cut, also reaction on the heals of worldwide soaring markets. Today's action is probably another confirmation of the maxim, buy on the rumor, sell on the news.
Edit: Looking, today's action was actually quite tame. Dow a little down, NAS a little up. All in all, nada.
Right and I think this is a good reason why the fed is doing it - it's not only helping folks with HELOCs but folks whose adjustable first mortgages have reset.
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