well hallelujah, they didn’t castrate themselves i’m impressed with ben
You’re welcome Joey. I called Ben myself and explained to him how a rate cut will adversely effect us all. It didn’t take much convincing once I named dropped JDV.
Yayyyyy. SO happy
Thank you all for your kind support. Oh yeah…
> Have you ever heard of stagflation? > > A rate decrease while we have high inflation (I > mean year-over-year, not the recent CPI report) > and projected flat growth, that kills consumer > purchasing power. And what drives the US economy? > That’s right, consumers. That’s why we don’t need > a rate decrease. Do you know what Inflation is or how it works? I am not so sure. How would a rate decrease “kill consumers”? The fed is lowering a benchmark interest rate, not general interest rate (which they can’t). Do you honestly think that miraculously mortgage rates, car payments rate, credit card interest rate… fall 50 bp? Do you honestly think people will start spending massive money, leading to high inflation? It doesn’t work that way. What impacts consumers are general interest rate, which isn’t going to fall anytime soon. There is not a 1:1 relationship between interest rate and inflation. I give you a perfect example: HELOC rates (prime + margins) will rise as margin increase will offset any prime decline. Banks are limiting liquidity to the consumers.
I’m definitely putting my vote in the “rate decrease is inflationary” camp. I guess I will also put my vote in the “inflation is bad for consumers” camp, but not as enthusiastically. I will also put my vote in the “Fed can do a whole ton to influence ‘general interest rate’” camp (whatever general interest rate is). Inflation sucks for nearly everyone, unless you have borrowed lots of money and are working in a job with frequent salary readjustments.
Since the “beginning” of the subprime crisis (circa August 2007), how many interest rate cuts have been announced by the Fed? A lot. How much have mortgages rates, credit card rates, car rates fallen? Zippo. Hope that answers your question.
swtxlady Wrote: ------------------------------------------------------- > Since the “beginning” of the subprime crisis > (circa August 2007), how many interest rate cuts > have been announced by the Fed? A lot. > > How much have mortgages rates, credit card rates, > car rates fallen? Zippo. > > Hope that answers your question. Those cuts were at a time when interest rates were historically low. All the rate cuts did was make it easier for subprime borrowers to get loans, which is what got us into this mess in the first place. As to your comment about consumers, they are NOT the only force driving inflation. Supply-side economics follows that an unexpected supply-side shock (i.e. a rebel attack on a main African pipeline or another devastating hurricane) could drastically increase inflation despite what consumers curbing spending. Mark my word, if we see $140/barrell oil it will have little to do with consumer demand. Sure people and business are going to use more energy when it’s cheaper, but they won’t account for huge inflation - supply shocks CAN and WILL. Not to mention that a rate cut depreciates the dollar, which ALSO adds to inflation. I graduated with a degree in economics, I think I have a little knowledge about what goes into inflationary pressure. Therefore, I am celebrating that the Fed did not change anything today - to quote a Bloomberg article, “Downside risks to growth and the upside risk to inflation are both of significant concern.” Booyah!
swtxlady Wrote: ------------------------------------------------------- > Since the “beginning” of the subprime crisis > (circa August 2007), how many interest rate cuts > have been announced by the Fed? A lot. > > How much have mortgages rates, credit card rates, > car rates fallen? Zippo. > That’s consumer credit and it would be unlikely for consumer rates to fall during a time when we are abandoning a paradigm in which $40 trillion of debt was insured in ways we now find deeply suspect. > Hope that answers your question. Good thing I had you to explain it to me.
Giving consumers more opportunity to drive up inflation is the last thing we need in this market, given the supply-side risks and dollar depreciation that makes foreign goods more expensive.
hope and expectations from the government definitely spring eternal. just look at the afternoon session today. market is full of a bunch of weaners who just won’t let go of papa mama’s hands. yeah, lets drag this out 2 more years…the ending isn’t going to change.
3 words can save us all: let heads roll
exactly all’s we want is some good talibanistic prevention of vice and promotion of virtue bloodletting…give us our evening entertainment in the stadium, and we’ll start buying. until then, we’re just going to keep baying for blood…
Not to mention a good stoning
took words out of my mouth. i say lets have some honor killings while we’re at it.
woh…not cool, not cool. we’re talking vice and virtue, not male chauvinism.
JoeyDVivre Wrote: ------------------------------------------------------- > If the Fed drops interest rates >= 50 bp and the > market jumps up, I will be in a foul mood. I will > come on AF and tell anyone who applauds that > decision and thinks this is a fine buying > opportunity that they are stupid. Then I will be > cranky for the rest of the evening. Let’s > everyone try to avoid that. If you have friends > who are Fed governors, please tell them that this > is BS. If they do it anyway, keep selling your > stocks. > > Thank-you for your kind understanding. alot of people tend to get caught up in bear rallies. any move by the fed isn’t likely to significantly alter the fundamentals.
swtxlady Wrote: ------------------------------------------------------- > > Have you ever heard of stagflation? > > > > A rate decrease while we have high inflation (I > > mean year-over-year, not the recent CPI report) > > and projected flat growth, that kills consumer > > purchasing power. And what drives the US > economy? > > That’s right, consumers. That’s why we don’t > need > > a rate decrease. > > Do you know what Inflation is or how it works? I > am not so sure. > > How would a rate decrease “kill consumers”? The > fed is lowering a benchmark interest rate, not > general interest rate (which they can’t). Do you > honestly think that miraculously mortgage rates, > car payments rate, credit card interest rate… > fall 50 bp? Do you honestly think people will > start spending massive money, leading to high > inflation? It doesn’t work that way. What impacts > consumers are general interest rate, which isn’t > going to fall anytime soon. There is not a 1:1 > relationship between interest rate and inflation. > > I give you a perfect example: HELOC rates (prime + > margins) will rise as margin increase will offset > any prime decline. Banks are limiting liquidity to > the consumers. a rate decrease does not improve balance sheets
swtxlady Wrote: ------------------------------------------------------- > Since the “beginning” of the subprime crisis > (circa August 2007), how many interest rate cuts > have been announced by the Fed? A lot. > > How much have mortgages rates, credit card rates, > car rates fallen? Zippo. > > Hope that answers your question. when you decrease interest rates then you also increase the money supply, more money chasing the same amount of goods = inflation and asset price bubbles. its what got us in this mess in the first place.