If the FED had never cut

Discussion in 'Economics' started by NY0BScalper, Mar 15, 2008.

  1. Obviously no one knows the answer to this, but I'll throw it out there anyway. I understand why the FED would never do this as they are controlled by the interests of the banking elite, but what if the FED had said from the get-go of this whole liquidity crisis "it is not our job to bail out private corporations who took on too much risk and for many years reaped the benefits of it. Our main objective is to be vigilant against inflation. Recession is necessary. The system needs to self cleanse. Actions to dampen the downfall are the types of actions that got us into this situation in the first place. The pain of the cleansing will be less than the pain of inflation combined with the pain of a loss of confidence in the FED. 5.25 remains."

    Methinks: Oil at $86, Gold at $790, EURUSD at 1.42, and SPX at 1175, while inflation would be much more well contained and the long term outlook for our country and economy, as well as the financial sector, would be significantly improved.
  2. yes, but that is the number there they absolutely wanted to avoid 1175 on the sp 500.

    Don't ask me why. Election year? Need for Republicans to stay in office at all costs? Hope that this year we won't go into a recession or God forbid a "Bear Market"?

    Or perhaps to salvage as much from bad investments as possible by delaying hoping a more favorable price will return.

    Greed at any cost to the taxpayers. Sad thing - no one does anything about it (demand representation) until too late.

    "As the world turns. . ."

  3. We cannot have a serious bear market anymore. The country cannot afford it and would go bankrupt. So many pension and retirement plans depend on the stock market returning 10% a year to meet obligations that if the printing presses aren't run overtime to make up for a weak economy, the stock market collapses. The Fed course of action is to inflate their way out of the credit problems, which will work, at severe costs to purchasing power for the consumer, and devastating to the savers.

    As much as they insist, the Fed is not independent, they have political pressures and Bush was the one who appointed this clown who's pushing the monetary strings. Look, Americans and in particular politicians and bankers have this great fear of another Depression, and that's why you are seeing so many panicky moves and huge rate cuts to appease the Street. In the long run, rate cuts don't solve the problem, they are methadone shots that provide very short term relief but makes the patient feel worse later.
  4. If the fed still had rates at 5.25%...

    The XLF and XHB would both be below 10.

    The DOW would be below 7000.

    Massive runs on banks and financial institutions would cause world markets to plunge along with the U.S.

    That being said, I think the Fed is bordering on going too far with the rescue packages.

    Let BSC go under.

    Cut .50 on tuesday and then let the markets work themselves out from here.
  5. amylase


    I disagree. The world don't care and actually don't bother with what is happening in the U.S.

    If the U.S. is to sink into the bottom of the ocean tomorrow, that would not significantly shake markets in europe or japan (less than 25% max).

    I believe in the theory of decoupled economy.
  6. Boy its refreshing to see that some people get it.

    You nailed it.

    The FED is trying to avoid recession at all costs, which:

    A) won't work, and make things worse in the long run.

    B) is not even their mandate. Price stability is #1, stable growth #2.

  7. Stop fighting the Feds, no use.
  8. Apparently you're the only one who thinks so.

    Markets have been crushed since the first fed rate cuts.