Fed Cuts Rate Again
Well, my open letter to the Fed didn’t have any effect (not that I actually thought it would). The Fed has cut the interest rate yet again, by 3/4 of a percent (75 basis points) so look for headlines about how the dollar is further weakened.
I truly do not understand this. Just today, CNN Money says that inflation is the biggest concern regarding the economy in a recent poll of average Americans. Surely the Fed remembers us average Americans? You know, the consumers that are supposed to be driving almost 70% of our economy nowadays (a very dangerous number if you ask me). Funny thing happens when consumers feel there is inflation: they tend to spend less for non-essential (I think the term is “discretionary”) purchases, because most of the money is going to fill the gas tank and refrigerator and pantry.
Then there is this mysterious “consumer confidence” number, and not surprisingly that has been plummeting recently. What is this consumer confidence, and how do they measure it? Anyone have a link that explains it in laymans’ terms? Because this consumer is not feeling very confident right now. Heck, THIS consumer (me) hasn’t felt confident for over a year now.
I know there will some folks who think this latest Fed rate cut is a good thing. According to an MSN MoneyCentral article posted today, this latest rate cut won’t help normal people. Personally, I was shocked to see someone go through the trouble of research to back up my rantings, and even more shocked a mainstream media published it.
So let’s bring the Fed’s latest action to a personal level: My savings interest is going to fall again. I don’t have credit cards, but those rates don’t seem very affected by what the Fed does anyway. No personal loans, no more auto loans. Just a fixed rate mortgage left, so the Fed has basically given the Americans who are trying to be responsible with money the big middle finger. I might as well quit beating around the bush and call this latest rate cut “downright stupid, because that is how I feel.
Thanks for nothing, Federal Reserve Board and Mr Ben Bernake. Please allow me to return that one finger salute.
(Note: there is ONE person on the Fed board who has been sounding the inflation alarm: Richard Fischer from Dallas. My hat’s off to him for fighting the good fight. Now Charles Plosser from Philadelphia has joined in voting against today’s boneheaded move.)
