Federal Reserve makes emergency rate cut

MSNBC ^ | 01.22.08

[Perdogg]

Federal Reserve makes emergency rate cut.

[cake_crumb]

"Too little too late? Better late than never? Damned if you do/don’t?"

[cake_crumb]

"With Jimmy Carter it had all the look and feel of one...."

It sure as heck did.

[cake_crumb]

The misery index was invented by Carter, dear.

[XR7]

Surely you think we should include other items besides food and shelter?

Good point.
Like how about taxes and add-on fees imposed by by a multitude of various jurisdictions?

[cake_crumb]

I’m collecting lemming pictures. For some reason, it seems like a good idea today.

[JeffAtlanta]

Current inflation is 4.5%, not 1.5% according to CPI. Surely you think we should include other items besides food and shelter? Most definitely. I was not the one that asserted that inflation is currently 1.5%, that was cake_crumb. The CPI numbers have been cooked since the early 1990s. That is how energy prices have gone through the roof the last few years but CPI has barely budged.

[Tigen]

[JeffAtlanta]

I knew that Beranke was either incompetent or corrupt when I heard him testify that the declining dollar was only a concern to those that traveled overseas.

[RKBA Democrat]

“The latter approach carries much more risk, but it also generates a lot more economic activity. Hence, the need to provide that someone with a tax incentive to “invest” his money instead of “saving” it.”

What you say would be true if returns were held constant. Of course you would put your money into a less risky investment if the returns were the same. But they’re not. Risk is compensated over time with higher returns. To wit, the greatly higher returns over the long term for stocks versus bonds. Risk is compensated by higher returns.

Tax treatment can impact returns, but it’s not the primary motivator in most circumstances. And watch out where it is the primary mover: remember the last construction bust in the late 80’s? That was in large part caused by investors chasing real estate tax shelters that had little basis in economic reality.

Also, by giving relatively favorable treatment to passive income (investments) you disincentivize workers from working longer and harder to earn more money. That has an impact as well. If the tax incentive is toward passive investing versus work, don’t be surprised when people are more interested in watching the stock market than they are in working.

(irony alert :-))

[green iguana]

You’re clueless. An economist invented the misery index, not a peanut farmer. Carter was too dumb to invent anything but he did use it to criticize Ford.

Reagan popularized it by slamming Carter with it incessantly.

[Boanarges]

I’m for leaving interest rates alone for 100 years. Let the Fed arbitrarily pick an interest rate then call it a day. Let the free market work out the excesses along the way and let the economic downturns untangle themselves.

Fed intervention is madness.

[XR7]

The US Misery Index
http://www.miseryindex.us/

Misery Index (9.01) = Unemployment rate (4.7) + Inflation rate (4.31)

The misery index was initiated by economist Arthur Okun, an adviser to President Lyndon Johnson in the 1970's. It is simply the unemployment rate added to the inflation rate. It is assumed that both a higher rate of unemployment and a worsening of inflation both create economic and social costs for a country. A combination of rising inflation and more people of out of work implies a deterioration in economic performance and a rise in the misery index.

[JeffAtlanta]

I’m pretty sure that Carter didn’t coin the term ‘recession’ either.

[Justa]

"If we use the method from the 1970s, we have about 8% inflation, not 1.5%."

Exactamundo, which is why I'm in the market. I earned over 13% last year that way beating inflation by 5% and my savings account by 10%.

[Mad_Tom_Rackham]

The dollar will go down since it is cheaper.

And the price if imports (like oil) will rise. This is a death spiral.

[Captain Kirk]

The problem is that as long as it exists the Fed will “never call it a day.”

[Perdogg]

Howard Ruff would be proud.

[Cedar]

“This rate cut is intended to cause Americans to spend more.”

Most “regular” Americans don’t play the stock market, but invest in safe CD’s. This drop in interest earned will give them less cash to spend.

[Deo volente]

Average MISERY INDEX under Jimmy Carter: 16.27

Average MISERY INDEX under George W. Bush: 7.96

http://www.miseryindex.us/indexbypresident.asp

[GovernmentIsTheProblem]

“Anti-capitalist FReepers deeply saddened.”

How is having a central bank, rather than the market, setting interest rates capitalist?

Remember, slavery is freedom!

Black is the new white.