US Federal Reserve Yahoo Business is the site of the article. The Us Federal Reserve is raising the discount rate from 0.5% to 0.75%. This primarily effects overnight lending to banks. The move is expected not to have a negative effect on lending that would effect consumers or businesses directly.
Blah, blah. Lots of boring money talk. Let me tell you what I think. The markets see through this precursor for changes to come. The markets are plenty scared of this administrations anti profit agenda. This has become the deepest recession since the 1930's primarily because of the initial government response. The current administration may see profit as evil but businesses that are profitable are good for everybody.
I have too many people close to me that are suffering from the diminishing job market. Although we all like all the government handouts, the markets know the actual effect of the inevitable tax increases, that will be required to pay for them ,will mean to the business that will need to do the hiring in any recovery. The free markets are great looking glasses as to how immediate policy moves are likely to effect the economy.
Raising the discount and federal funds rates will be necessary as we move into a recovery but even the Fed doesn't see that happening before 2011. Predictions that far out mean that they are being optimistic and assume we should be looking at a recovery at some point. I just hope they don't use news like January's unemployment rate going down by 0.4% while the US economy lost 22,000 more jobs in one month. Does that not make sense to anyone else?
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You know, very little of it makes sense, and that isn't just for us little folks, either. I heard Obama say last week that the unemployment rate had gone down, but we still continue to lose jobs. What the heck? How does that even happen? It can't happen both ways. But I have seen that the latest unemployment rates are up again, as most expected. You know, sometimes...I just wanna scream. This tactic (The Keynesian Model of Economics) has never worked, and it won't work this time even for Mr. Obama.
ReplyDeleteIt's simple: the unemployment rate doesn't count those who are working two or three part-time jobs, or who've quit trying to find a job. The *real* unemployment rate--the one that counts those applying for unemployment (including the estimated 20% that get bullied out of actually finishing the paperwork by the unemployment office employees), those who are working part time or at a job they're overqualified for, and those who've given up--the rate is creeping up on 20%.
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