fed reserve rate cuts???

"if the fed does not reduce the short term rate this year due to possible inflation..."

Doesn't the Fed raise rates to combat inflation? Anyway, the Fed employs hundreds of PhDs to look at all the economic data. They're not stupid. Maybe you should get a PhD and work for them if you think you're so smart.

well i do have a B.S in mathematics...

You're talking about the ignorance of the fed when you're the one advocating reducing rates to fight inflation? You don't even need to know much economic theory to realize that that just doesn't make intuitive sense.

no, i was not advocating reducing the rate to fight inflation..

go home

I feel like we should reduce rates, increase the money supply, and shoot up the real exchange rate. Those feds aint no nothin.

There is no way the fed would reduce rates. It wouldn't be helpful to combat a recession because inflation would go through the roof. Look at the bond yields for 10 and 30 yrs. Why do you think the market plunged 198 pts today?

The next move by the fed is probably a rate hike if inflation keeps moving the way it is. Growth is pathetic with high inflation, the US is actually almost already in a recession if you go by the actual definition.

i am saying if the fed delays in cutting short term rates this could increase the likelihood of the u.s. falling into a recession...

they are delaying because inflation is still a factor..

econ 101 wrote:

no, i was not advocating reducing the rate to fight inflation..

go home

Ok. I reread your first sentence. I get what you're saying now. Sorry calling you out.

econ 101 wrote:

no, i was not advocating reducing the rate to fight inflation..

"if the fed does not reduce the short term rate this year due to possible inflation..."

That's what you implied and I called you out on it. Read up on your economics. A math degree is a good start but unless you have a PhD in economics, don't act like you're a know-it-all like in the tone of the language of your first post. The Fed employs hundreds of people with PhDs in areas like math, stats, and economics. Get a PhD and you'll have some credibility.

Be more careful with your language if you want to go spouting off about the "ignorance" of the Fed. "Ignorance" is too strong and not the correct word to use. They know a lot. They are constantly analyzing tons of economic data. If I were you, I might have used "mistaken" or a word along those lines. I'm finished.

no worries; it's just a msg board...

o.k i see the err in my ways..

i should have reworded my first statement...

btw are you employed by the fed?

just asking...

People obsess of macroeconomic data and try to find causality by looking at simple correlations. After which they extrapolate doomsday recessionary conclusions. It needs to stop.

A mathematics B.S. is in no way going to enlighten you in the ways of the markets, young padawan. Albeit I'm sure you can plug and chug numbers very well through SAS and matlab.

econ 101 wrote:

if the fed does not reduce the short term rate this year due to possible inflation does this increase the likelihood of a recession by next year?

Will we have a recession next year?

Also can Fed be so ignorant and assume that the housing sector would take longer than a year to recover based upon the last 4-5 years of rapid growth...?

What would be the motivation behind their ignorance?

Thoughts???

The Fed has no fine tools to work with, only blunt instruments and can do some real damage. Fed is stuck between a rock and a hard place.

What we need here is a good old fashioned tax cut. What the market is really afraid of is the Dummycrats letting the Bush tax cuts expire when we need to cut them even more.

The fed should cut the federal funds rate this year. The economy is moving at a sluggish pace. I don't see a recession happening if they don't cut the rate but I continued sluggish growth. Got to keep watching the jobs reports. So far if you average them out, things show continued slow growth. The yield curve is now slightly positive instead of flat so that is consistent with more slow growth too. Also need to watch the price of oil.

If oil prices go up (I think it will stay in the 50-75 dollar range) but if it goes above say 80, start to worry about a recession. People will spend all their money at the pump and not have anything to spend at the mall.

It is speculation on my part but I think a lot of people have priced in the market a cut in the federal funds rate this year. If it doesn't happen, the market might have to have a correction.

price stability... price stability... price stability... this is the primary goal of federal reserve policy

in fact most countries reserve banks have a set target inflation rate that they aim to hit every quarter and will raise or lower rates accordingly

so while the probability that an interest rate hike or leaving rates where they are might reduce consumer spending... if there are inflationary threats the fed will not cut rates

the Feds number one concern right now is keeping rates high for the most important reason:

Keep foreign holders in the dollar, in the dollar, and attract foreign holders to higher bond rates.

If the fed were to reduce rates, then the dollar would be dumped by foreign banks and it would plummet, ensuring that oil would be very expensive to buy.

Of course, at some point, it will have to cut rates if the economy slows down or stops entirely because it risks a governmental backlash and public relations nightmare, which it is well on its way to doing.

Sometimes the less numbers and econ BS you know, the smarter you become. You economists are a classic bunch of missing the forest for the trees.

I think its funny. Make me some more funny money when you panic.

Its about time!

I was waiting for ILPs to chime in w/ university-learned drivel.

Still short the market? ...or is that too just more smoke blowing out of your ass.

Trade a book, or at least go play with your own money, rather than calling trends while you have nothing on the line....

Guns, gold and canned goods wrote:

Its about time!

I was waiting for ILPs to chime in w/ university-learned drivel.

Still short the market? ...or is that too just more smoke blowing out of your ass.

Trade a book, or at least go play with your own money, rather than calling trends while you have nothing on the line....