[Marine1974]

Originally Posted by retiredguy123

Can anyone provide a logical reason why the Fed reduced interest rates by 0.5 percent? I watched several financial TV shows and got nothing but a bunch of gobbledygook.

Interest only payments on our national debt just hit 1.trillion per year .and they’re getting ready to borrow more . More disturbing is the government borrows 1 trillion every 100 days .
Employment reports indicated layoffs .
The fed if not a branch of government and should not be
determining interest rates . Supply and demand would make banks compete for our $$$$ .
Nixon Taking our dollar off the gold standard was a failure. Our dollar has lost 90 % of its value to the U.S. postage stamp .

[Aces4]

Originally Posted by Two Bills

I would imagine many young families, struggling their way up the ladder of life, will be more than happy to see a rate reduction.
The oldies, still fighting to be the richest people in the cemetery, not so happy.

This remark reminds me of teenagers and the younger generation grousing at retirees for being "rich". Never mind the fact that many of us worked so hard and long for our money and hope to have enough to get us out the door. If anyone requires assisted living toward the end of their days, they can expect expenses from $6,000. to $10,000. a month.

When raising our young family and both of us working with excellent credit ratings, we encountered interest rates in the late 1970's and early 80's at 17%. We didn't start blaming our retired parents because they were living off their savings. We appreciated the fact that they knew, as we did, how to cut corners, live smaller and work.

I just love people who sarcastically indicate every retiree planning on making their funds work as being rich. Perhaps it's because they are sitting on a pot of gold but it's not becoming.

[Aces4]

Originally Posted by Marine1974

Interest only payments on our national debt just hit 1.trillion per year .and they’re getting ready to borrow more . More disturbing is the government borrows 1 trillion every 100 days .
Employment reports indicated layoffs .
The fed if not a branch of government and should not be
determining interest rates . Supply and demand would make banks compete for our $$$$ .
Nixon Taking our dollar off the gold standard was a failure. Our dollar has lost 90 % of its value to the U.S. postage stamp .

Ain't it the truth? I tired of the manipulation of what should be private money to pump up the way overvalued stock market, which is funny money. If people ever stood back, analyzed and cast a critical eye at what the stock market really is, it would collapse within days, IMO.

[mtlee024]

Originally Posted by Boomer

Inflation peaked at 9.1% in mid-2022 as we were making our way out of Covid.

NOW inflation is at 2.5%.


The Fed does not operate in a vacuum. There are 19 people on the committee and 12 of them get to vote. 11 of the 12 voted for the half point cut. The other one wanted a quarter point cut. But all agreed the time has come to cut and cut again.

The economy is not a horror like some are being led to believe. We are in recovery. Be glad.

This So Sad, Too Bad routine I have seen from those who have been rooting for a recession makes no sense to me. I must assume they have been dysinformed.

I accept the fact that my money market is going to take a hit, but I don't think we will have to return to nothing. I think this rate cut is going to drive the economy in an even more positive direction -- so I can give up something to get something. I hope to see 5% mortgages so the housing market can normalize and first time buyers can have a chance and corporate landlords won't have really cheap money to use to hog all the starter homes and gouge renters. That would be good for the economy on so many levels. Interest rates have been obscenely low for a lot of this century. Maybe, just maybe, we are on our way to normal.

Boomer

No way current inflation is 2.5%, inflation is an accunulative thing. Something in 2020 that cost $10 at 9.1 infkation cost $10.91. If as you sugget inflation is just 2.5% then that item now cost $11.81. Seems to me my $10 iinflation is 10.81%. We can do anything we want with numbers and statistics. So don';t listen to that 2.5% inflation BS.

[Federspiel]

When did the Feds quit including energy and groceries in the inflation percentage?

[Aces4]

Originally Posted by Federspiel

When did the Feds quit including energy and groceries in the inflation percentage?

When they became a nuisance and messed up the illusion they were trying to create.

[rsmurano]

Good Debt creates wealth, for both people and businesses. If the interest rates are low, you can take out a loan to buy a house or a car instead of cashing out of equities that gives you much better returns than paying off a cheap loan. Same goes for companies especially small businesses. They can use this cheap money to expand their business instead of taking money out of the cash reserves of the company.
I’ve made a fortune for 30 years by using debt to buy houses and cars on debt (low interest rates) when I could have easily pay cash for them. For example, say I bought a house for $1M and at that time, I could buy it using a 3% loan for 30 years or sell equities that are making me anywhere from 10% to 40%, which makes more sense? Some will say you don’t always make that much return on your money, and this is true, but when the market tanks, thats the worst time to sell equities to buy a house or a car.
I think Ramsey and Orman are dead wrong in regards to debt and home debt. They think by paying off a house, you will then have money 7-10 years down the road to invest. That’s wrong! You will lose 7-10 years of compounded interest gains, and losing 10 years of investing, you have to quadruple your monthly amount to invest and still not get you to where you would have been investing throughout this time. In my experience, my last few homes in the early 2000’s, I was making enough money in dividends alone in a year to pay for 3-4 mortgages. That’s free money!

[jimjamuser]

Originally Posted by retiredguy123

Can anyone provide a logical reason why the Fed reduced interest rates by 0.5 percent? I watched several financial TV shows and got nothing but a bunch of gobbledygook.

It is actually pretty simple. The FED RAISED rates to combat INFLATION. They now feel that inflation is under CONTROL, so they can reduce rates.

[jimjamuser]

Originally Posted by tophcfa

That’s an easy one to answer. Our country, both government and most citizens, are up to their eyeballs in debt. Debt is like crack, and lower rates is like getting the needed crack fix at a much cheaper price. And just like with crack, too much debt never ends well. All the gobbledygook is just a smokescreen because nobody wants to address the real underlying problem.

All the news outlets are giddy about how the lower rates will help everyone in debt, but there is no mention about how it hurts senior citizens who need to earn a reasonable interest rate on their savings to supplement their social security and keep up with inflation.

Seniors will NOT be hurt by the Fed. bringing down the interest rate. Yes seniors with interest paying investments will get less gain (less money) but that money will NOW go further because things that they want to buy are going DOWN in price.......such as gas prices, food, clothing and etc. NOTE: those prices will NOT go down INSTANTLY, it will take a few months. Prices tend to LAG interest changes.

[jimjamuser]

Originally Posted by Normal

I think the response time was a little slow. The cut was just right. It would have been a quarter if they were more certain of a recession was not coming. The economy is like a big ship, it takes a while to turn.

Right now ONLY 30% of economic experts think that we will have a recession. Not getting a recession will be very impressive for the Fed because it is difficult for them to "tiptoe" the line that they must walk to keep the US out of recession. The FED is to be applauded.

[jimjamuser]

Originally Posted by CoachKandSportsguy

former finance guy to the rescue.

1) The current rates of inflation have trended down and is close or the core is at or below the fed's target rate of 2%. Primary goal accomplished!

2) the labor market is much weaker than the headline numbers show. Why is that statement appear to be true? Because the annual true up adjustment was down about 700,000 jobs or so, which is about 70K per month overstated Likewise the month following the monthly inithialreading, true up adjustments are all negative / down as well. So for what every reporting source is being used for the initial monthly reading, is toohigh, and so the market is weaker in reality, than the BLS is portraying

3) The Sahm rule is right at the labor recession threshold, meaning that any further weakness in the labor market is signal a recession is imminent.

4) Powell is a being a bit more political than he would ever admit, but if there was ever a time to avoid any labor recessions or numbers or indicators showing that a recession is imminent, now is the time to reduce rates to avoid any negative economic press prior to the election.

Does that work for you?

Some will call me naive, but I feel that the FED has been allowed to stay independent and above politics in recent years.

[jimjamuser]

Originally Posted by Aces4

You forgot to add that it pushes more money into the pyramid scheme (stock market) so it will look healthy and people will think they're getting rich.

I say people invested in CD's should pull all their money out of the financial institutions where people enjoy the use of their "free money" and see how long the stock market lasts. What a joke the whole thing is!

The stock market will last as long as America as we know it will last. Only a nuclear holocaust could stop the sock markets of the world.

[jimjamuser]

Originally Posted by Boomer

Inflation peaked at 9.1% in mid-2022 as we were making our way out of Covid.

NOW inflation is at 2.5%.


The Fed does not operate in a vacuum. There are 19 people on the committee and 12 of them get to vote. 11 of the 12 voted for the half point cut. The other one wanted a quarter point cut. But all agreed the time has come to cut and cut again.

The economy is not a horror like some are being led to believe. We are in recovery. Be glad.

This So Sad, Too Bad routine I have seen from those who have been rooting for a recession makes no sense to me. I must assume they have been dysinformed.

I accept the fact that my money market is going to take a hit, but I don't think we will have to return to nothing. I think this rate cut is going to drive the economy in an even more positive direction -- so I can give up something to get something. I hope to see 5% mortgages so the housing market can normalize and first time buyers can have a chance and corporate landlords won't have really cheap money to use to hog all the starter homes and gouge renters. That would be good for the economy on so many levels. Interest rates have been obscenely low for a lot of this century. Maybe, just maybe, we are on our way to normal.

Boomer

A nearly PERFECT post......excellent.

[Aces4]

Originally Posted by rsmurano

Good Debt creates wealth, for both people and businesses. If the interest rates are low, you can take out a loan to buy a house or a car instead of cashing out of equities that gives you much better returns than paying off a cheap loan. Same goes for companies especially small businesses. They can use this cheap money to expand their business instead of taking money out of the cash reserves of the company.
I’ve made a fortune for 30 years by using debt to buy houses and cars on debt (low interest rates) when I could have easily pay cash for them. For example, say I bought a house for $1M and at that time, I could buy it using a 3% loan for 30 years or sell equities that are making me anywhere from 10% to 40%, which makes more sense? Some will say you don’t always make that much return on your money, and this is true, but when the market tanks, thats the worst time to sell equities to buy a house or a car.
I think Ramsey and Orman are dead wrong in regards to debt and home debt. They think by paying off a house, you will then have money 7-10 years down the road to invest. That’s wrong! You will lose 7-10 years of compounded interest gains, and losing 10 years of investing, you have to quadruple your monthly amount to invest and still not get you to where you would have been investing throughout this time. In my experience, my last few homes in the early 2000’s, I was making enough money in dividends alone in a year to pay for 3-4 mortgages. That’s free money!

So one made a fortune off other people's "cheap money". Bully for them and therein, people lies the problem. We did very well using our own money paying off mortgages that weren't cheap and the free money one used from the market... people, I rest my case. What a screwed up mess this country is in today.

[Aces4]

Originally Posted by jimjamuser

A nearly PERFECT post......excellent.

Guess some don't have to grocery shop, provide day care for children, buy clothing and medical care and on and on. The post missed on almost every mark.