Shouldn't the Federal Reserve raise interest rates?
The costs of living are rising? So shouldn’t the fed raise rates to slow things down? I think subprime threw them a curve ball! But I think they should crack down on fraud and mismanagement, jail a few major investors and change investment rules so that the volatility in the markets will erase itself. After all, the markets are mostly bets placed on a rise and fall of a stock price or percieved values per moment, when in acuality, some companies need this cash, but many do not! They do not need investor’s money to keep going, so they are using that leverage to make money in the markets off of options and dissuading smaller investors from playing against the house. Is this fair? Should our stock market be played like this? And should they be allowed to play our tax dollars like this too?
I think raise interest rates and watch these guys sweat a little like they have made small investors sweat!
While I agree that wealth pays taxes, I am also aware that somebody raised those children to get that wealth! The people that put the diapers on those kids and paid for their education and what not do not deserve to be downtrodden. I am an American Taxpayer and I don’t like paying double taxes, once to put diapers on the wealthy kids and then again to pay for extravagant homes they did not have to buy in the first place.
I cannot imagine owning a 700k house when I am in my early 20′s! That is just so totally bogus! I am opposed to supporting that! I busted my hump most of my life to even have my modest lifestyle now!
I want the fed to do it’s job and raise interest rates!
Comments
The Fed is right to cut rates…..the economy needs to be stimulated to avoid a recession.
FBI is already invetigating the mis use of CDOs. No need for collective punishment to ev3yone in the US by raising interest rates out of spite.
The inflation you speak off is mostly commodity inflation caused by increase demand and long investment cycles in the related industries. Resricting money supply wont lower oil prices directly. It may lower them by driving economies into recession.
Increacing interest rates in a time like this is what caused the great depression and the Japanese lost decade.
The Fed needs to cut rates so it will allow banks to be able to make a profit. It also allows people to borrow money. This is expecially important now since many people need to refinance from subprime loans. Although the Fed doesn’t want to make drastic cuts (more than .5 now, maybe another .5 next month) because inflation will begin to creep up more and we’ll have to be careful of a stagflation period. It’s a tricky situation and I don’t think the Fed is leading markets. If anything they aren’t paying enough attention to them.
But secretly I’m hoping they won’t make the expected .5 cut and the market will drop – as a small investor I’m looking to buy more already depressed stocks. Use this opportunity to buy – these periods only come around every 10 years or so. Last one was 01, but before that it was 1990.
I think you need to consider your logic a little bit… This is yahoo answers, not yahoo rants, with that said.
Should the fed raise rates? Yes they should, and in due time they will. Perhaps they want to keep a bunch of people in their houses, so if they lower interest rates they can create artificial demand for housing. So, the fed may be making things worse, but only time will tell.
The fed should jail investors? Really, I don’t think investors did anything illegal. Part of investing is assuming a risk for a potential reward. People that invested in sub-prime mortgages are seeing some of this risk now. But a smart investment play right now, is probably to be buying these cmo’s. Further, the federal reserve is a bank, it cannot jail anyone.
They do not need investor’s money to keep going, so they are using that leverage to make money in the markets off of options and dissuading smaller investors from playing against the house. Is this fair? Yes it is fair, and smaller investors can win. I agree that short term, a company may “dissuade” investors, but take a long term stance with a quality company, and you (the small individual investor) will win. Try to figure out what will happen this week, this month, or this year. YOU WILL LOOSE YOUR MONEY. Invest in companies that will be here in 10 years and beyond, and you will do very well. Companies need money for expansion, repairs to ppe, so there will always be a demand for capital.
And should they be allowed to play our tax dollars like this too? The lions share of US taxes are paid by corporations. So if they make a dollar, the government makes more than if a citizen makes a dollar. The government will always get their money, and if not, maybe they will just print more.!
Raising interest rates now would really make me sweat! I live in an area that there are a lot of foreclosures right now. If the fed raised interest rates, even more people would foreclose on their house driving the value of mine down. This situation is a lose-lose for the fed.
The Fed is in the business to keep its people on Wall Street happy … creating bubbles is one way they do that. If the Fed raises rates, Wall Street will be unhappy, so they will continue lowering rates to 0.5% like Japan.
There are three problems with your understanding of the situation. The economy is slowing on its own — and the Fed is responding to that. I believe that we are already in a recession. The economy doesn’t need to be slowed more.
The second thing you have wrong is that you think that the Fed controls interest rates. The fed is a player in the market — but the market controls interest rates. If you look at the data, you will see that the Fed usually lags behind the market — not the other way around.
The third problem with your analysis is that if the cost of living is in fact rising, then a rise in interest rates will actually increase the cost of living even more — plunging us into deeper problems.
September 7th, 2010 at 5:30 am
There are a number of things that can be done to help reduce excessive speculation by hedge funds who use paper trades to force up commodity prices despite these market speculators not having any storage units to house oil, gas,grains, for example. If you don’t own or employ any long term leases for storage, include the cost of storage and maintenance for these various type of units. Like real estate mortgage, rent, leasing, maintenance, etc, short term traders cost of speculating comes too easy with regards to jumping in and out of fickle trades. Increase margin requirements on a daily basis and see how secure traders feel about the longer term of holding on to nickle, iron ore, pork bellies, etc. Trade pork bellies and traders should be chopping up the stuff in their trader garbs and going home all smelly and slimy. You trade it, then pay for the barrels and the freezer and moving costs.
The fed can still lower rates and still see deflation from the housing markets. Look at Japan with the lowest interest rates around. Deflation galore.
Find a way for "traders" to face more responsibility in their ability to manipulate markets. Owing to the "Globalization" of markets however, each country may have different rules for trading. Traders hate regulation for themselves, but they love it for me and you.