How The Fed Rate Cut Could Hurt

Question

Here is an interesting article on the Fed rate cut.  It shows how it could hurt housing.

http://biz.yahoo.com/cnnm/080318/031408_ratecut_mortgages.html

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Toby Munk · Answer

I am forcing myself to be patient.

In terms of the troubles it is the average person that is hurting. The rich are not effected by all of this yet. Unless you are a managing partner at Bear Stearns obviously.

The fact that the fed is pumping money into the system when commodities are at all time highs and rising fast makes inflation an almost guaranteed thing.

If wages rise accordingly (which it does not look like right now) we will just get out of debt by ways of inflation.

Not good for the US Dollar. The market is just getting ready for the next wave of selling.

Jon Holdman · Answer

Seems the dollar is strengthening, rather than falling as you would expect with that rate cut.  My interpretation would be "the markets" think the rate cut and other actions will actually improve the situation.  I'd have been inclined to agree with Mike here, but it looks like at least for the moment, we're being too pessimistic.

On the other hand, it could just be a dead cat bounce.

Jon

Michael Shadow · Answer

The thing that has me stumped is that everything (the usdx, currency value, silver & gold prices, etc...) seems to be going opposite of what it should be doing with such a massive rate cut these last few days.  Something doesn't add up and it has me scratching my head wondering what could be going on...)

-Michael

Michael Rossi · Answer

So, the Fed rate cuts may actually cause mortgage rates to go up PLUS cause runaway inflation.  They are BRILLIANT, aren't they?  My question is whether the Fed could possibly do any more damage?

They should make me the Fed.  Since I don't know anything about being the Fed, I'd just do NOTHING, which would be infinitely preferable to what the Fed is doing!!!

Mike