Even if what you say about the 50 basis point rate cut ( and the weaker dollar ) as it relates to CRUDE OIL is correct, why in Earth would you sacrifice the banking system in order to bring down commodity inflation, much of which is the result of Global forces and not domestic ones? You and the others that carry this "We Need To Create A Recession In Order To Bring About A Correction in Commodity Inflation" torch conveniently avoid[/i] how raising rates would "cripple" the banking system. So how do you cut off your nose despite your face in this regard? Please address what happens to the banking system if rates are raised for the sake of bringing about a correction in inflation. As it is, please be mindful that the current U.S. banking system is literally "frozen". Thank You.
Cutting 225 bps while oil has gone up $30 is insanity, and that will soon be 275 bps in a month. And the 30 year mortgage rates are going up, not down. This is not what the Fed wanted. It just makes me more bullish on commodities the more these idiots ignore inflation.
If you can show me were I said anything about raising rates, I will stand corrected. The fed should have let the free market sort this out. They should stand aside and quit micro mannanging.
Yes it does! Every time they talk about tame inflation the commodity markets give a big FU back. Talk is cheap it's all in the charts.
I am not sure what aspect you are talking about in the "free market" because it's the free market that partly caused this nightmare to start with. Trillions of dollars in derivatives and level 3 garbage were conjured up by the "free market" and not because of sound government policy and watch dogs.
EDIT: VISA sure picked a good time to "unlock it's true value in the marketplace". What will happen when the credit card defaults start to sky rocket? Meanwhile MBIA and friends are conducting business as usual and people wonder why things are so f#&ed up.
Eventually the piper has to be paid. Perhaps the discount could be lowered, or the Fed could spam dollars in auctions like the ECB is doing. They didn't cut rates, but they sure as hell threw a lot of Euros at the banking system. The Fed has other tools at it's disposal, and while I'm not saying it should have not cut rates, I am saying it should have not cut rates so deep, so fast, with no concern about anything else. There will be a price to pay for this action, and it will be John Q. Public who pays it once again. With no savings, no purchasing power, and no discretionary income, the consumer will be dragged out the back door and beaten, left to bleed to death in the alley way. But all the banks will be just fine! Perhaps some banks have to fail when they make poor decisions? Maybe we need less of them. I don't know the answer, but the answer is certainly NOT stagflation! The market has mechanisms for getting itself out of recession. But every time the Fed steps in to micro manage it, history shows them mucking it up!
Yeah, the fed has friends on wall street, but they really exist to serve the government. The U.S. government is the worst offender by spending however much money they want. I vote for the tightwad every time (not sure who that is, if Ron Paul is not a choice).