Will An Interest Rate Cut Help?
Now that the bank welfare plan is behind us.......and nothing happened.... Expect an expected interest rate cut to be the new salvation.
Will it help??? Not a chance!!!! Maybe we might see a shot term spike in the market but in the long term things will be much worse.
Fewer will want to hold treasuries causing prices to fall and real rates to go up. In addition, expect any devaluation in the dollar to more than offset any benefit from a rate decline.
Once you give politicans a shovel....it is amazing how deep they can dig our economic grave.
Cut rates....raise prices......hmmmmmmmm.
Just so you understand...the problem is not too little money to lend.....it is too few borrowers capabable and/or willing to borrow. We juiced our economy by extending trillions worth of credit to millions who were not qualified....now our economy is out of juice. You think lowering rates a point or two is going to make a difference??? It will only devalue the dollar and raise the prices on almost everything we buy.
Despite my warning....expect the drum beats to get louder and louder.
How many of you are looking forward to 90% tax rates to pay for Bush's ADDITIONAL $5 Trillion of Debt plus Trillions accumulated at the State and Local levels?
Sure, cut interest rates a percent or two but DOUBLE our taxes.....You have been warned.