Fed Rate Cut
in response to
by
TODAY'S DISCOVERY, TOMORROW'S FUTURE
Creating shareholder wealth by advancing gold projects through the exploration and mine development cycle.
Message: I'm in!
Since I'm posting I might aswell fly off the handle at the FEDs recent actions. WHAT A BUNCH OF MORONS! Another rate cut, and phony inflation data, does anyone believe this garbage? 0.8% inflation MY BUTT! I see the PPT is at it again and the hedge funds are dumping like mad while the markets are still inflated. What really gets me is the financial officals never say anything about the US dollar when asked except "its in out national interest to have a strong dollar policy" WHAT A JOKE, what will they do next, send in the clowns? This is turning into a circus! It will all end sooner or later, buy up that gold!-------------------------------------------------The FEDs didn't have much of a choice. They had to lower rates because there still is a huge threat of the US economy dropping into recession. Even ex chairman of the federal reserves Alan Greenspan recently said it is about 50/50! Still the leading threat to the economy is the sub-prime mortgage problem. This is much bigger than most people realize and effects sectors across the board. On top of the sub-prime mortgages, other homeowners will be facing renewals of standard mortgages at hefty interest increases. Higher monthly payments for homes equals less money spent on toys, cars, travel, etc - that is if they can even afford to pay the new mortgage payments.Now you are right, lowering interest rates helps tank the US dollar. This makes all foreign goods more expensive. Since the US imports far far more then they export, you can imagine this will be creating inflationary pressure on consumers. Therefore you can bet the long-term outlook will be to increase interest rates (but never during an election year). In the mean time the policy makers are hoping to make US manufactured goods/services more attractive to help rebalance foreign trade.The bottom line is this: there is zero support for the US dollar. The financial sector has been in a bubble and is currently under pressure due to the housing market collapse. If this sector tanks, the US economy will drop into recession. Consumer confidence is weak meaning consumers are spending less. To fend off recession, the Feds have been lowering interest rates even with high real inflation numbers. This policy is sacrificing the US dollar and increasing inflation. (note: real inflation is caused by increasing money supply which is what they have also been doing as much as possible to back bail out the financial markets among other things like paying for a war). If the US drops into recession, the stock and bond markets will not be friendly! The biggest hedge against inflation is GOLD!!! The biggest hedge against a falling US dollar (the worlds reserve currency) is GOLD!!!
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