Fed Rate Cut Could Revive Inflation

Washington Post:

The Federal Reserve Board's rate cut yesterday increased the chances that months of Fed moves could start to trickle down to homeowners in time to ease the pain when adjustable-rate mortgages reset this year. And people who borrow money to pay tuition, buy cars or cover unpaid credit card bills might eventually see some benefit.

But the Fed's action could also revive inflation, many economists fear. By reducing the interest rate financial institutions charge each other for short-term loans, the Fed makes money more readily and cheaply available. If it miscalculates, it can pump too much money into the economy, fueling excessive demand for goods, housing and capital spending -- and driving up prices.

Read the whole story: Washington Post

Comments

[dadw5boys]

PLEASE PLEASE PLEASE!!!!!!!!!!

If you do not understand the Federal Reserve and how it works watch this video.
http://video.google.com/videoplay?docid=-9050474362583451279&q=money&hl=en

Get your whole family around espically the kids they need to know this for their financial furture.

[DismayedRepub]

The FED rate adjustment is not having much effect on fixed mortgage rates because these rates are set by the long term economic outlook. The FED rate does have an effect on the shorter term items such as credit cards and ARMs. Although the prices of precious metals have been beat down I’m still buying. You know stuff like gold, silver & lead.

[javaman]

Could??? COULD???? what planet do these fucktards live on???? prices of food have been going up up up! for the last year and a half. Have they even looked at the price of gas??? Have they even looked at how worthless the dollar is world wide?

good fucking god, I wish these morons would get down from their frigging ivory towers once a century and take a good god damn look around.

fucking jerks, all of them

[ajax2]

"But the Fed's action could also revive inflation, many economists fear."

Inflation does not need any reviving. It's here and growing quite nicely.

[doneflyin]

Revive inflation? Drive up prices??
Poor ole Jeezus on a ritz cracker, do these economists live on air, float to work and not need to live indoors?
Don't they buy food, gas, utilities or use credit cards that can now charge up to 30% interest?
Are they like plants or do they just have IQs like plants?

Facts are stubborn things, but these are facts. Costs of living are doubling and it ain't gonna get any better.
The dollar is going to keep getting hammered, oil prices will get higher, the ethanol nonsense will keep driving up food prices and the fat cats will keep getting their federal bail out payola.

Good God! You can only spin so much and then it just gets ridiculous and border line insane.

[Rog49Thomas]

The potential disease is (a) Great Depression (b) Severe Recession (c) Mild Recession.

The medicine will probably cause inflation.

The Fed is betting that it can avoid (a) and (b) and that the country can tolerate higher inflation.

[speakingtruth2power]

Unfortunately, the Fed has an agenda far beyond correcting the economy.

The Fed has been infected with the same Bushification we see in the Dept.

of Justice, the Military, SCOTUS and the rest of government. Replacing the

professionals with ideologues is what went wrong in Iraq, Katrina and now

our economy. To blame it all on incompetence and corruption is too naive!

When there are too many coincidences, you can conclude it's conspiratorial.

Milton Friedman is the key to understanding the Bush crime family's agenda.

[wolf58]

If bush would have done what he said back in 2000 the cost of most things that involves oil would not be as high as it is and as high as it will get. here is what the lier said.

Bush Would Use Power of Persuasion to Raise Oil Supply
By KATHARINE Q. SEELYE
Gov. George W. Bush of Texas said today that if he was president, he would bring down gasoline prices through sheer force of personality, by creating enough political good will with oil-producing nations that they would increase their supply of crude.

''I would work with our friends in OPEC to convince them to open up the spigot, to increase the supply,'' Mr. Bush, the presumptive Republican candidate for president, told reporters here today. ''Use the capital that my administration will earn, with the Kuwaitis or the Saudis, and convince them to open up the spigot.''

Implicit in his comments was a criticism of the Clinton administration as failing to take advantage of the good will that the United States built with Kuwait and Saudi Arabia during the Persian Gulf war in 1991. Also implicit was that as the son of the president who built the coalition that drove the Iraqis out of Kuwait, Mr. Bush would be able to establish ties on a personal level that would persuade oil-producing nations that they owed the United States something in return.

''Ours is a nation that helped Kuwait and the Saudis, and you'd think we'd have the capital necessary to convince them to increase the crude supplies,'' he said.

Asked why the Clinton administration had not been able to use the power of personal persuasion, Mr. Bush said: ''The fundamental question is, 'Will I be a successful president when it comes to foreign policy?' ''

He went on to suggest, as he did in answer to other questions, that voters should simply trust him.

[MilwaukeeDan]

"Could Revive Inflation?", this writer has been drinking the government kool aid, bought gas lately, how about food? Their numbers don't add up.

[godlessclif]

That is an incredible understatement.
Gold is over $1000 an ounce
silver over $20 an ounce.

Gold has tripled
Silver has doubled.

Oil has doubled in price and will stay above $100 a barrel
the headline is "Rate cuts [b]may[/b] reignite inflation.

What are they waiting for to recognize inflation?
The $1.00 postage stamp? The $10 ice cream cone?
The $5.00 cup of coffee? wait starbucks has the $5.00 cup of coffee already.

[mhj555]

Stock up on canned goods and noodles folks.

[godlessclif]

Spaghettios will sell at $100 a can

[frappe]

lol ... ahh, "Chef Boyardee", what would we do without him?

[frappe]

"Fed Rate Cut Could Revive Inflation"

"Revive" inflation? Whaaa? Inflation has been alive and well for some time now. Gas and food prices have skyrocketed over the past several years.

I feel especially sorry for those on fixed incomes. It must be very, very difficult for them....And did Congress or the Republicans change the way the "cost of living index" is calculated for "COLA" purposes (Cost of Living Adjustment)? Because, certainly, food and energy costs should be an essential or fundamental part of that calculation or equation. Otherwise, social security adjustments will fall pathetically short of the mark.

[thegreatgiginthesky]

When looking at inflation they do not take the price of gas and food into account. Before you shoot me, understand that I am just giving you this information. I don't agree with it and I think it is a totally bullshit stat.

[woodchipper]

Why is it that Wall Street rebounds briefly whenever the Fed lowers rates? Are investors that gullible that they don't see the long term effects that these "band aids" have on the value of our dollar? We have such short term thinking in this country I'm surprised we're able to predict the next sunrise.

[leftLibertarian]

Those 'free marketers' of Wall Street cried like a little baby and now Big Mummy Gummit is gonna bail 'em out again.

[Troubledwawa]

Since Bernanke started cutting interest rates, he has cut 3%, from 5.25% down to 2.25% - http://www.federalreserve.gov/fomc/fundsrate.htm

On June 1, 2007 (Fed rate at 5.25%) , the 30 yr fixed was 6.42% while the 1 yr ARM was at 5.57%.

On March 14th, the 30 yr fixed (last page of link) was 6.13% while the 1 yr ARM was at 4.94% - http://www.mortgage-x.com/x/ratesweekly.asp

The odds are that this cut will do little to help people refinance, or help with the reset. Even when Greenspan had the rate down to 1%, the 30 yr fixed barely made it to 5%, while the 1 yr ARM was in the 3% range.

These cuts may be geared more towards stopping another bank failure in the immediate future, as well.

[Sundialsvc4]

"From a distance ... there is har-mo-ny ..."

You know the song.

From an altitude of 150,000 feet when you're bringing down 7 figures a year twisting knobs for your friendly neighborhood investment bank... you don't feel or hear or understand a single thing.

Your nation is fighting a war of aggression ... a war crime ... and it has not yet dawned on you that a good part of what you are seeing today is the world's quiet response. You don't produce. You manipulate your currency while printing a million more dollars every minute. And yet, to you it's "all business." To you "the world revolves around you, of course it does." Wake up and smell the coffee. Start listening, for once, to what the world is telling you; what your own people are telling you.

You ... don't ... know what you are talking about.