I know some of you are going to disagree and probably argue about this but we really need to stop lowering the federal funds rate, and here's why.

First we need to consider all the aspects of what is going on right now in the economy. Overall the economy is still doing fairly well. Existing home sales were up in October, much to everyone's surprise, wholesale sales rose 0.7% in October and are expected to rise for November as well, and over 90,000 jobs have been added to the economy in the last month alone.

Fourth quarter sales (Holiday Season) are looking promising. Black Friday and Cyber Monday, which are usually good indicators for the fourth quarter, broke several records. Black Friday sales were up to $2.1 Billion, a slight rise to last year, and Cyber Monday sales were just over $730 Million, a 21% increase over last year.

Inflation is one of the key issues that the fed is concerned about, but not what they should be concerned about the most. So far this year, inflation has averaged 2.586% this year (through October), well below the average of 3.0-3.5%. We may not be moving at warp speed, but we are still moving ahead at a decent pace.

So what should the fed be concerned about? There are several things the fed should be concerned with including the Dollar versus the Euro, foreign investors like China and oil/energy prices. Let's take a look at these one by one.

First, the Dollar and the Euro. Last year the Euro was worth about $1.20 to $1.25. Not bad since the Euro is backed by actual gold bullion sitting in a vault, whereas the dollar is now backed by the word of our government to pay off outstanding debt against it (and over $7.4 trillion in debt so far and rising). Investors weren't worried since the Euro is fairly new, having come on the market in 1999.

Let's look at now. The Euro is now averaging about $1.45 - $1.50 to our dollar. Twenty-five cents may not seem like much, however when you are talking about hundreds of billions of dollars, like China, who has over $700 Billion in U.S. currency, the purchasing power of our dollar has declined by over 20% in less than a year, while the Euro has been rising. That means that China just lost $14 Billion (rough estimate) in purchasing power. Let me put it another way. Bill Gates has just lost about 1/3 of his net worth in less than a year.

Now let's really look at the foreign investors to our country. China is the second highest investor in the United States. As I said, they have about $700 Billion or so that they keep earning interest on and re-investing in our country to make even more money and help fuel our economy. Now that the Euro is climbing faster and faster in value than the weakening dollar, China is looking to start investing and converting some of their $700 Billion surplus into the Euro to have more buying power and to hedge against the dollars loss in value.

If and when this happens, you can expect the dollar to lose even more ground since where China leads; several other foreign countries and investors will follow. In fact, there is an article today on Yahoo!, stating that German confidence is sliding in our economy, hitting a record low. If this happens, we may also see goods that we buy overseas increase dramatically in price (think about a Mercedes or BMW that would go from $35,000 to $45,000 or $50,000 for the exact same car).

Last, lets look at oil prices. Currently oil prices are priced in U.S. Dollars (although there is speculation that this may change in the near future if the Euro keeps increasing in value over the dollar). With the Euro adding 15% or so in value over the last year, oil prices are remaining high because the purchasing power of our dollar is at an all time low.

If oil prices are lower, prices for things we buy the most like gas and food (which are not counted in the inflation rate), the overall costs would be going down. I don't know about you, but I'm tired of paying almost $4 for a gallon of milk.

I know the housing market is fueling most of this fire; however there are some decent solutions to help slow down and stop this fire from spreading any further. First, get the two FHA bills passed and into effect as soon as possible. This will help keep anywhere from 40-55%, or more of future foreclosures from coming on the market and help families to keep their homes. Second, increase the debt allowance (and loan amounts) for Fannie Mae and Freddie Mac so they can purchase more loans from banks to keep the money moving.

Another thing that can be done is to pass a law freezing the interest rates on adjustable rate mortgages for two years until homeowners can re-finance their existing loans. Also, allow FHA to re-finance these people with no equity or those who are a little upside down. It may increase their payment by two hundred dollars or so for the mortgage insurance, but that is better than getting a letter in the mail stating your payment is increasing by $800 and possibly forcing that family into foreclosure, adding more fuel to the fire. We all know that the housing market will rebound, just as it has over the last 100 years. It goes up, comes down, and goes right back up again even higher than before.

If we can get the Euro back to the $1.20 to $1.25 mark, keep foreign investors here and release some tension on gas prices (which will lower other things as well), and bailout the homeowners who are in trouble, we can stop the fire from spreading and eventually put it out, boost the economy back to a low warp speed pace, and get everything back on track.

So go ahead and let the debate begin!