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CAN SOMEBODY EXPLAIN TO ME.....

By "Captain Liberty" and "Rumpole"

Why the Federal Reserve cut rates yesterday?  The move pumps money into the economy. The lower rates frees up money for banks to lend more money to small businesses and and individuals. Cheaper rates allow the banks to loans to less credit worthy applicants, because the cost of the loan is cheaper.  More credit will allow the housing market to come back.  All of that seems good. Query: Isn't that what got us into trouble in the first place? Yesterday the Fed lowered the prime rate to 1%.  I seem to recall the same rate fueling the housing bubble, the mortgage fraud business, and causing our mailbox to be stuffed with credit card offers.  We just spent a trillion dollars to erase those bad loans, and not a month later we're starting the cycle all over again?It just doesn't seem right to me...continue to full post

Full post as published by Justice Building Blog on October 30, 2008 (boomark / email).