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    • Wed Oct 31st 05:03 AM | Rating: 0 0
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      Why The Fed Should Not Cut Interest Rates
      If...we cut rates...which I believe we should, not just this 1/4 point but later on a second 1/4 point...then we will STILL be more than 2% higher than we were a couple/few years ago.

      We SLASHED interest rates dramatically and quickly during the "Nasdaq/tech bubble-bursting period" and did NOT experience runaway inflation along with a "dramatic devaluing" of the dollar during that 3 1/4 year period...AND we are supposed to believe that a reduction in our trade imbalance and an increase in American jobs and overseas sales (exports!) is a bad thing?!?!?

      Yes, home prices are down...but not lower than they were a few years ago...lower than they were during the last 1-3 years of the "Real Estate Bubble" (direct correlation to the Tech Bubble phenomenon?)...but for those who bought homes 5-10 years ago, they are still sitting on a significant increase in real estate values. Lesson to be learned...buying a home to live in...long term...and it can be a good investment...trying to "daytrade" a home...you can get burnt just like you can with the stock market.

      The fed should and will lower rates....for a short period of time...allow people and lenders a chance to get out of some bad loans, etc...give "investors" a chance to pick up some "bargains" and wash out the excess inventory in the system (Which will help "level off" the home prices) and once the housing market has stabilized...then the fed will look to raise the funds rate again. We raised rates too fast (because Greenspan wanted a specific "equilibrium"... rate to retire at) ...and now we are correcting the "too high" scenario.
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