First, we are facing slower growth as a result of the housing and credit crises. Second, we have, so far, done well to stave off any large negative effects--the Fed has lowered rates and thrown money at the problem. Third, unemployment has changed very little considering the huge importance of housing related jobs and the number lost.
However, our biggest problem may yet be upon us ... INFLATION. We are already seeing soaring food and commodity prices that are bound to affect how we behave, if they haven't already. Now, there is all this talk about the Fed lowering rates and the government offering a stimulus package, yet what consideration has been made to the consequences of said actions? If the Fed lowers rates any further, I fear we will see oil prices soar way above $100 per barrel, and food prices will climb just as well. And considering how dependent we are upon oil for every day items, boy we could be in trouble. What about the stimulus? Well, consider the horrendous fiscal condition we are in today. We spend billions on Iraq, Medicare, and Social Security, leading us to deficits every month. The US has financed its great success on the backs of foreign investors that have been all too eager to gobble up the debt. You have to think, though, that with the credit crisis and falling value of the dollar, there will be a shrinking appetite for US Treasury notes. So, who will finance our stimulus package?
Yeah, that's a tough one. But all of my rant is for naught, because this is an election year, and pandering is all about. Maybe we could use a "fireside" chat from those in the know so that Americans could begin to understand the predicament into which the younger generations, including myself, will have to dig out of in order to survive.
Check out this Fortune article. It certainly gives some credence to my statements about the Fed.
Do we need to lower interest rates? Do you like to pass the buck?
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