(Ben Bernanke is on the right and his predecessor Alan Greenspan is on the left)
The name is Ben Bernanke.....
Have you heard his name?
Do you wonder what he does?
And more importantly...How does he affect each of us as consumers?
Well, for starters, he took over the position that the well know Alan Greenspan held for 18 years as Chairman of the Federal Reserve. The Chairman of the Federal Reserve is nominated by the President of the United States and is approved by the Senate. The Chairman ultimately decides the direction of our economy. But how? Through the course of releasing money into our economy or putting a stranglehold on it by pulling dollars back by the use of interest rates. Interest rates are the driving force in the United Stated economy. It determines how much consumers (you and me) will pay for credit cards, car payments, bank loans and most important...Your mortgage! That's right, your mortgage.
Here is a simple way of explaining the actions of the Federal Reserve:
Increasing the interest rates = Fighting inflation in our economy.
Decreasing the interest rates = Loosening the money supply to lubricate the financial markets.
The gameplan for the Fed is to keep our economy in check and the value of the US dollar as strong as possible.
The Fed must look at employment levels, the stock market, global business, consumer spending and many other economic indicators to determine the direction of the economy and the required action to keep everything in balance. Keeping in mind that the actions of the Federal Reserve today will ultimately determine the affects of its actions in some regards instantly, but more so in the months following.
If things get out of hand, we could see another stock market crash, with the Great Depression being the result. None of us want to see that happen again!
On the flipside, we can see an "Economic Boom", which is great! But...the old saying holds true, "too much of one thing can ultimately turn bad!" Remember the .com crash?
Current snapshot as of 11/1/2006
Interest rates are declining slowly, the national inventory of homes is up, home prices are expected to appreciate at more realistic levels...between 4-6%, which is a more realistic real estate market than the recent double digit appreciation levels realized across the United States over the past 5 years.
Scott Gormley
Broker/Owner
Oak Valley Mortgage
2006 Chico Assoc. of Realtors Affiliate Chairman
Direct: 530.592.8362
Fax: 530.267.5555
Website: http://www.CALoan.com
Blog: http://activerain.com/blogs/lendingmagician
"You find the perfect home, we'll find the perfect loan!"
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Seems to be that Alan Greenspan is the predecessor, not the other way around, as in your caption.