So over the past week I have heard over and over that another Fed cut is imminent. That would be like the hundredth cut in less then a year right and obviously nothing is getting better. In fact it is just making the problem worse. I haven’t seen any boost from the other cuts, so why would this one be any different? I am going to try and use my Economics 101 savvy to try and ponder this out (forgive me if some things I say seem crazy).
First off the people are yammering for the Fed to make a cut into interest rates so banks will be more willing to borrow money to loan out to investors. That seems all good and stuff, but this just causes more dollars to be distributed and more bad loans to be made. On top of that as the supply of dollars increases the value of it will continue to go down, which will in turn cause the U.S. foreign investment to worsen and the dollar seemingly worthless.
Basically to me it just seems like each Fed cut will keep the U.S economy in this downhill spiral that it is already in and worsen the problem that we will eventually have to face.
Now obviously the economic logic I used could be taken several different ways, so take it has you will. In my opinion, LETS JUST FACE THE MUSIC.