I guess the fed was right?

quote from Pa(b)st Prime

You guy's are missing some key points.

First off. The dollar only loses value vis a vis an easing cycle, if no one else is easing.
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Fundamentally and absolutely incorrect.


quote from Pa(b)st Prime
2. The dollar is no lower vs. the majors than at other points in time. In fact against the Yen it's been at the same level for years. Once upon a time the Pound was 3.50. Because the majors have crappy "balance sheets" so to speak they're all losing ground to some emerging currencies that don't come strapped with budget deficits and looming entitlement issues.
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On a relative basis you may be correct (the dollar is no lower vs. the majors...).

However, inflation is a global phenomena and every central bank around the world has participated in stealing money from the ignorant masses.

Absolute versus relative.

Respectfully Pabst, your economic logic is missing a few key points....
 
From the POV of a true gold bug, that is, one who believes all currencies will crap out versus gold, no. His logic is actually quite good.
Stop fixating on the dollar.
 
In terms of Euros, the S&P is still in a massive bear market since 2000. That's a 7 1/2 year killer bear market thanks to Greenspan, and Bernanke is now doing the same thing or worse.

If you think having the dollar slide 50%+ vs other currencies is a good thing, then yes Bernanke is doing exactly right and may hit his target soon. But in that case why stop at 0.5%? Why not just cut rates to 0%? Surely that would *guarantee* no recession? Homeowners and industry would be bailed out nicely.
 
if inflation does get out of the hand, the fed still has the option to raise rates in the future. why couldnt the cut have been just a temporary easing to help the credit problem?
 
Quote from dafong:

if inflation does get out of the hand, the fed still has the option to raise rates in the future. why couldnt the cut have been just a temporary easing to help the credit problem?
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And how exactly does it help the credit problem? What it has done has reassured the credit markets it that there maynot be an immediate need to recalc their spreadsheets fact of the matter though the ARMS reset hasnt even begun yet I think it peaks around June next year with all these loans going from 1-2% to as around 7-8% but I have heard of some going to 13%

I was very wrong before when a castigated Sissy Puddle saying the subprime worries were hocus and comparing it to Aus I was ignorant to the scale of the prob and this has a long way to go.
 
According to Bush, Paulson and Bernanke the sub prime issue was "contained", yet now we have a 50BP cut due to the wider economic ramifications of this. It begs the question why nobody acted earlier - even before the stock prices started signalling problems the signs were there for someone who was not asleep at the switch in the form of increasingly exotic mortgages needed to pull ever more marginal people into the leveraged housing punt and keep the bubble going.

Also I fail to understand why it was necessary to wait and do NOTHING for two weeks and then cut the discount rate at the last minute as payment systems started breaking down. Anyone who was in trouble should have been arm twisted to borrow at a punitive rate earlier, rather than being alowed to hold out for a cut and in the interim jeapordise the financial markets. They should not have been allowed to use their influence to hold out until they could borrow at a less punitive rate that was more to their liking.

It sems both times the Fed has misrepresented and then acted in a way to produce the maximum upward force to markets.

This is really about buying time for prices and thus balance sheets to normalise and to buy the time needed for big players to unwind their positions.

P.S. If you are on a pension linked to the fake non representative CPI you will find it increasingly difficult to make ends meet/maintain your lifestyle. The market (and property) could continue to go up despite the broader damage as it represents a hedge against hyperinflation. Importing deflation from structural industry relocation to China offset a lot of inflation but that is ended, China has inflation of its own and the USD is heading for toilet paper status with commensurate purchasing power.

Bernanke has indicated (for what that is worth) that ing=flation is the target going forward, but i don't see him having what it takes to put rates to back where they were once the immediate crisis has clearly passed.
 
Quote from myminitrading:
Thats to bad because opportunity are created during recessions, I welcome recessions
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Many of us do, but Joe Average working a 9-to-5 doesn't. He depends on his job. Recessions have companies laying off people in masses.

I am sure the Fed has run different economic scenarios running into 2008 and 2009 and concluded the long-term economic risks of a deep recession outweigh inflation concerns. Even more so, if global economic activity is going to cool down a bit thanks to the US slowing down.

How can anybody here rule out (at this point) that the Fed got it just right?
 
Quote from makloda:

Many of us do, but Joe Average working a 9-to-5 doesn't. He depends on his job. Recessions have companies laying off people in masses.

I am sure the Fed has run different economic scenarios running into 2008 and 2009 and concluded the long-term economic risks of a deep recession outweigh inflation concerns. Even more so, if global economic activity is going to cool down a bit thanks to the US slowing down.

How can anybody here rule out (at this point) that the Fed got it just right?
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NO MORE GOLDILOCKS analogies please.
 
Quote from Tracy McGreedy:

since the fed cut discount rate in august, the dollar has fallen 6%. if u didn't make 6% on ur entire net worth, u lost.
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If you have no EUR in your account, you lost ! :p
 
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