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Fed Cut A Mistake

The Federal Reserve is blowing it. Inflation is at 4% and they continue to dig an economical pit by cutting rates.

Some of the very best CD rates are barely at 4% right now and that is for 50+ months. So if you have your money in most accounts then you are losing money. Prior to this week, the Fed had cut 300 basis points off of the federal fund rate in hopes to boost the economy & patch up the housing market.

It has not worked so far and they are continuing to play their broken record. The more they play, the more inflation we are experiencing.

We have been fortunate that the mortgage backed securities have not felt the inflation pinch. How long can that hold out for? Will we see 7% this year on the 30 year rates? All arrows point to yes.

Posted by Jeff Fullmer - Real Estate Investor/Financier on 05/02/2008 05:12 PM

Comments (5)

federal reserve, rates, mortgage

5 Comments on Fed Cut A Mistake

MAY

2008

Rates may need to go higher but it would be better if gas and food prices went lower. One of the main reasons for the rate cut in to keep the adjustable mortgages out there in check. Higher rates would mean more people losing their homes and I think they want to stem the flow of foreclosures into the market.

I agree. They are making a big mistake. The hole is getting deeper and deeper.
There is a bigger problem though. Of the people running for president sombody is going to win!

MAY

2008

I agree. It's a mistake because it is not going to affect consumer rates enough to stimulate economic growth.

MAY

2008

Randy, forclosure rates are going UP though since all of the cuts. Yes, a few more people would lose their home b/c of a much higher payment. BUT how many people will lose their home due to inflation increasing & the rises in the cost of food/gas because of a weakening dollar? Thanks for commenting!

Barry, you named the biggest problem of all. Very profound! Thanks.

Lisa, exactly. So it saves someone on their adjusting ARM a couple hundred dollars a month. Is that really the problem or is it that those in an andjusting arm not able to refi have financial mismanagment issues? Should the entire US economy (and resulting world economy) take a dive for less then .0001% of the population?

NOV

2008

I liked your blog and articles... I'm starting a sub referral group at realestateloans dot com within a few weeks... please consider joining me. It may also be a good place to syndicate your articles. mike mike.realestateloans.com

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