Quote:
Originally Posted by Aces4
That is so funny! Prices won't retract to pre-inflation levels and inflation is still going on even if it's lower now.
A good analogy is a fire ripping through one's home, leaving ashes before the local fire department can extinguish all the flames. The fire department finishes and hands the burned off door knob to the owner and says, there you go, it's safe now with no more fire. Enjoy your evening at home.  |
Prices won't RETRACT. Historically they go up 3% each year. The FED has just reduced the BORROWING rate by 1/2 of a percent. They initially raised the RATE to keep prices from going up (say 7%) now they are satisfied that PRICES have STOPPED going up. Now they hope that PRICES will go back to about a 3% rise. So, they reduce the BORROWING rate by 1/2 of a percent.
.........The FEDS purpose is to prevent a wild price SPIRAL that gets out of control.