[justjim]

I don’t think even the so called “experts” know what the results of A.I. are really going to bring. We are entering into a “new phase” that will bring changes that “old folks” like us can’t imagine. Jobs will be lost and new jobs created similar to the move from an agricultural society to an industrial society.

OP, lowering interest rates may
allow some to buy in TV who are attempting to sell their current house. House prices will naturally rise with increased inflation. All of this doesn’t happen by clicking a switch or pushing a button. This is why Congress set up the Federal Reserve to be independent and manage inflation, monetary oversight and promote maximum employment. A.I. and tariffs certainly complicates the situation. All well above most of us pay grade. Fore.

[jimjamuser]

Originally Posted by vintageogauge

Small businesses will benefit greatly with a reduction as their cost of inventory and equipment as well as administration costs has skyrocketed along with an increase in employee wages in order to attract competent employees.. Strong small business is the backbone of our economy. In addition to lower rates helping, the new investments in the US promised by large corporations both domestic and foreign over the last 6 months will keep us going strong well into the future. Most everyone I know that owns or manages a business is excited with what is happening out there.

Small farmers are going bankrupt and even committing suicide today.

[rsmurano]

I guess economics wasn’t taken in college. There are many many factors that go into people buying a house, interest rates impact this greatly!
A few stats: 65% of the country lives paycheck to paycheck (working or receiving social security checks), 32% of home buyers pay cash, and the median net worth of a 65 year old is $400,000.
So to get a home loan, the DTI ratio has to be around 36%. So how much can a couple spend on a house if they have $50-$60,000 income (assumption is $40k from social security/pension and 4% withdrawal rate on $400,000-$500,000 portfolio).
Lower mortgage rates will help greatly in this scenario.
The bigger picture for a possible homeowner, most people in the country have car loans and I’m guessing they don’t have a 800 credit rating so they could be paying up to 10% for a car. How about credit card rates? In no interest days CC rates are in the 20% bracket, now I think they are much higher. Then these same people get loans to take a big vacation, loans to fix their cars, medical bills, buy toys, on and on.
Lower interest rates would greatly help the majority of the people. Lower interest rates will help lower their DTI ratio so they can qualify to buy a house. The lower the rate is, some cash buyers will get a loan instead and instead of taking the money out of the market to buy a home, they can earn much much more money in the market. I just did this buying a new car, the dealer gave me a couple grand off the price of the car if I would finance it instead of paying cash for it. So instead of taking $50k out of the market making tons of money, I took the loan and over the 3 years of financing, the total interest paid will be $300.

Lower interest rates will help the majority of businesses (small, medium, large) by keeping costs lower so they will be able to pay bigger dividends or make their businesses grow to make their stock price go up.

As for the stock market, why would people think it’s frothy/too high? Far from it. Look at gains since the 1st week of April? Huge gains! How about the huge gains his past week? Huge!!! 1 of my stocks went up 45% in 1 day, others went up over $10-$13 a share in 1 day, and look at Apple that was beaten down, I think they went up $25 this past week.
None of these gains had anything to do with interest rates nor were they based on PE ratios. I think the 1 stock that went up 45% has a PE in the hundreds. Some of these companies had their quarterly earnings reported and they beat on the top and bottom with very good future guidance or a couple of these companies landed huge contracts so the future looks good. I don’t look at the total market. I look at individual stocks, what’s their future look like, have they been beaten down lately so they might be a good value, on and on.
IMO, the day Powell or his replacement lowers rates (he should be fired and the rates should have been lowered months ago), the stock market will go up huge, and over the following couple of months, the home market will explode.

[Aces4]

Originally Posted by jimjamuser

Small farmers are going bankrupt and even committing suicide today.

Baloney, where are the stats showing small farmers are going broke and committing suicide?

[Aces4]

Originally Posted by kingofbeer

Lower interest rates will encourage first time home buyers to buy. And will encourage investors to move their money from money market and cd's into the stock market. Real estate investors is not the focus of lower interest rates.

There are many that will move their money into real estate and not the stock market. A tangible is much better than the illusion of safety and wealth.

[Aces4]

Originally Posted by rsmurano

I guess economics wasn’t taken in college. There are many many factors that go into people buying a house, interest rates impact this greatly!
A few stats: 65% of the country lives paycheck to paycheck (working or receiving social security checks), 32% of home buyers pay cash, and the median net worth of a 65 year old is $400,000.
So to get a home loan, the DTI ratio has to be around 36%. So how much can a couple spend on a house if they have $50-$60,000 income (assumption is $40k from social security/pension and 4% withdrawal rate on $400,000-$500,000 portfolio).
Lower mortgage rates will help greatly in this scenario.
The bigger picture for a possible homeowner, most people in the country have car loans and I’m guessing they don’t have a 800 credit rating so they could be paying up to 10% for a car. How about credit card rates? In no interest days CC rates are in the 20% bracket, now I think they are much higher. Then these same people get loans to take a big vacation, loans to fix their cars, medical bills, buy toys, on and on.
Lower interest rates would greatly help the majority of the people. Lower interest rates will help lower their DTI ratio so they can qualify to buy a house. The lower the rate is, some cash buyers will get a loan instead and instead of taking the money out of the market to buy a home, they can earn much much more money in the market. I just did this buying a new car, the dealer gave me a couple grand off the price of the car if I would finance it instead of paying cash for it. So instead of taking $50k out of the market making tons of money, I took the loan and over the 3 years of financing, the total interest paid will be $300.

Lower interest rates will help the majority of businesses (small, medium, large) by keeping costs lower so they will be able to pay bigger dividends or make their businesses grow to make their stock price go up.

As for the stock market, why would people think it’s frothy/too high? Far from it. Look at gains since the 1st week of April? Huge gains! How about the huge gains his past week? Huge!!! 1 of my stocks went up 45% in 1 day, others went up over $10-$13 a share in 1 day, and look at Apple that was beaten down, I think they went up $25 this past week.
None of these gains had anything to do with interest rates nor were they based on PE ratios. I think the 1 stock that went up 45% has a PE in the hundreds. Some of these companies had their quarterly earnings reported and they beat on the top and bottom with very good future guidance or a couple of these companies landed huge contracts so the future looks good. I don’t look at the total market. I look at individual stocks, what’s their future look like, have they been beaten down lately so they might be a good value, on and on.
IMO, the day Powell or his replacement lowers rates (he should be fired and the rates should have been lowered months ago), the stock market will go up huge, and over the following couple of months, the home market will explode.

The flatuous stock market gains are called inflation, to pay those "dividends" they need to sock it to the peoples. I'm not impressed and as far as your free money proposition, how about taking that money from the earners in the market vs the savers in the institutions to pad the everyone must spend attitude.

[Pugchief]

Originally Posted by jimjamuser

Small farmers are going bankrupt and even committing suicide today.

Originally Posted by Aces4

Baloney, where are the stats showing small farmers are going broke and committing suicide?

All I ever see on the news these days is stories about small farmers committing suicide! [/sarcasm]

[Pugchief]

Originally Posted by justjim

This is why Congress set up the Federal Reserve to be independent Fore!

May have been set up that way, but no longer the case. Five!

[Pugchief]

Originally Posted by kingofbeer

The Fed works. When inflation is sky high, lowering interest rates has proven to be the best way to lower inflation. This is economics 101.

No Econ 101 is leave the market alone and it will work itself out naturally.

Unintended consequences are the hallmark of virtually everything the government tries to "fix".

[Pugchief]

Originally Posted by Topspinmo

IMO Government spending always causes inflation. Until government stops spending more than takes in prices will continue to go up.

Correct.

need go back to gold standard, IMO that would limit government spending

Also correct. Which is why it will never happen.

[jimjamuser]

A.I. and robotics are the BIG changes on the horizon. People have problems dealing with rapid CHANGE. Major corporation CEOs are now scratching their heads and putting off any expansion because they are having trouble seeing into the future. And they have many multiples of experts. Even the FED seems a little confused.

[vintageogauge]

Originally Posted by Aces4

Baloney, where are the stats showing small farmers are going broke and committing suicide?

He's referring to the farmer that met the love of his life online only to be taken for a financial ride and then dumped. He ended up broke, lonely, and then did the deed.

[Aces4]

Originally Posted by vintageogauge

He's referring to the farmer that met the love of his life online only to be taken for a financial ride and then dumped. He ended up broke, lonely, and then did the deed.

[jimjamuser]

Originally Posted by mtdjed

We all have an expectation that we will continue to have an increasing standard of living. If that increase is due to increased skills and promotions, we move up the ladder. If that increase is cost of living it is inflation. More taxes, higher House prices is inflation and thus need for more cost of living increases. Fed rates lower allow for higher house/car/commodity prices and higher inflation. That means need for more cost of living increases.

The beat goes on. The people outside of the Cost of Living increase adjustments continue to fall behind. They then look to higher home prices when they sell, which keeps the cycle going.

You can't beat it, but you can ride the wave smartly.

The problem is that we have not seen an INCREASE in the standard of living since about 1970. Most people today feel they are not as well off as their parents - and their children will be LESS well off than they are. Outsourcing to AVOID labor unions began this problem about 1970. Many people believe that unions are a PROBLEM. They have been mesmerized into believing this, but it is NOT true.

[jimjamuser]

Originally Posted by RoboVil

The Fed needs to reduce interest rates so young people can afford to buy a house. Inflation is not that high, and Powell has said he wanted to wait until he sees the effects of tariffs. Now with the weakening labor market it is time to start lowering rates. Not because of pressure, but because it is common sense.

Shoes and other clothing prices are ALREADY up and rising. Parents facing higher back-to-school prices will be VERY UNHAPPY campers!