Sick & tired of the reporting it’s great news the Fed may be cutting interest rates!
 

The media is downright giddy that the most recent inflation report indicates the Fed might soon be cutting interest rates. Exactly how is that good news for responsible senior citizens who have saved their hard earned money, avoided debt, and want to earn a reasonable real rate of return above inflation on their savings?

If the market reacts in a positive increase to our savings I suggest our investments will earn a reasonable real rate of return.

The average American is not living on income earned from their savings as they have little savings. In fact they have more debt than savings. They have student debt, they have mortgage debt or hope to get a mortgage, they have credit card debt and maybe a car loan debt.

So for most people having a lower interest rate is good news as their mortgage goes down, student loan payment goes down, credit card payment goes down and they can buy a new car. The economy does not and should not be run to benefit wealthy retirees. They're doing fine even if they make less on their CDs and savings accounts.

If you own dividend paying stocks like Chevron for example, the stocks value normally will edge upwards when the interest rates go down as the dividend rate is then effectively offering a larger spread vs CDs.

It's bad news for rich old people only to the extent that they'll have fewer pieces of gold to fill their coffins with when they're buried.

It's good news for anyone who has debt in any legal institution that charges interest.

It has zero impact on anyone who has neither savings nor debt.

Not really true. Higher interest rates do not just apply to individuals but also to businesses. So high rates cost businesses money (other than banks) when they use debt to buy materials, build factories, etc. And that higher cost of money is then passed on to consumers. So lower interest rates benefit consumers whether they have neither savings nor debt.

Once upon a time the media would just report the news

Without a major recession, I doubt that interest rates will drop significantly. The treasury will still need to borrow money to fund the massive budget deficit.

" Since the mid-1940s, the United States has experienced several boom and bust cycles. Why do we have a boom and bust cycle instead of a long, steady economic growth period? The answer can be found in the way central banks handle the money supply.

During a boom, a central bank makes it easier to obtain credit by lending money at low interest rates. Individuals and businesses can then borrow money easily and cheaply and invest it in, say, technology stocks or houses. Many people earn high returns on their investments, and the economy grows.

The problem is that when credit is too easy to obtain and interest rates are too low, people will overinvest. This excess investment is called “malinvestment.” There won’t be enough demand for, say, all the homes that have been built, and the bust cycle will set in. Things that have been overinvested in will decline in value. Investors lose money, consumers cut spending and companies cut jobs. Credit becomes more difficult to obtain as boom-time borrowers become unable to make their loan payments. The bust periods are referred to as recessions; if the recession is particularly severe, it is called a depression." ("Boom and Bust Cycle: Definition, How It Works, and History", Adam Hayes, Investopedia dot com, 5/19/2024)

What is the common denominator? IMO, greed. And not a few boneheaded government actions.

Raise rates, and the economy crashes.
Cut rates and the dollar crashes.
Pick your poison.

That's pretty histrionic, don't you think?
neither will happen as the Fed will only change by 1/4 of a percent this month,
and that is not enough to change anything, even 1/2 of a percent, its not enough to change anything momentarily, especially with the 18-24 month effect to the economy

The interest rate curve is primary shaped by the treasury, as they auction bills, notes and bonds at various total amounts. Mortgage rates are already down by about 1 percentage point, and nothing much has changed in the housing market.

So, meh, right now, is all about inflation expectations and real rates shifting the curve down somewhat, and everyone waiting on the Treasury QRA for borrowing requirements. . How much more will be needed to fund the choices of congress and the current and past presidents?

In July, on a new home in TV I got a 30 year rate quote of 7% from Citizens First.
Tuesday I got a rate of 5.875% on a 30 through National Bank of Kansas City (nbkc).
Loan officer claims rate cut has already been built into the market.

I agree. Often, the Fed will lower interest rates so low that it rewards borrowers and punishes savers. People should be encouraged to save money and to avoid debt. The market should determine interest rates, not the Fed. That is my opinion.

Please explain.

Yes, 40% of Americans DO NOT have $400.00 in their “cookie jar” when they need it. Can you imagine? That is roughly 134,000,000 Americans.