Yesterday I posted about how there was going to be a blood bath today when the US financial markets opened. Well, as you can see by the screencap of an AP.org article at Yahoo News (get it here: http://biz.yahoo.com/…rates.html ) there wasn't quite the blood bath that I was expecting thanks to fast action by the Federal Reserve. They slashed interest rates dramatically--and I mean dramatically. Generally, they drop or raise in increments of a quarter or a half. Three-quarters is (in my observations) rare and, I would therefore assume, pretty serious.
The good news: lower interest rates means more loans taken so more money can be spent, in theory, strengthening the economy (buying shows confidence in the economy).
The bad news: more money in the system means the money that already exists is worth even less.
So, in the end, to this uneducated eye, it seems to be a short term fix to avert a major disaster. However, the over all weakness in the US economy is still there and, by my estimation, will become worse, though not as quickly as would have happened today without the Fed's move.
In my (again, uneducated) opinion, the only thing that will really strengthen our economy in a good way (a way that makes our money worth more) is if we slow down all this globalism stuff. Stop outsourcing every job and stop the execs from making all that money. Redistribute the wealth a bit (just a bit!) so us poor folks can stop taking loans every time we need to buy a washing machine or a car or when we start a business (you know, to create jobs).
At least, that's my theory. ^_^
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Orignal From: Fed Cuts Rates, Averts Some Bad