The limbo stick is barely off the ground. The Feds cut key interest rate to a range this time. Usually they set a % but the rate is now anything between 0.25% and 0%. One quarter of one percent and all the way down to zero.
The rate was previously 1%. That seemed low to me. This is the first time the Fed has cut the rate below 1% and they cut it to the floor! Many thought the rate would be cut to 0.5% or 0.25% but I did not think they would take it below 1%.
What does this mean to us? Certainly mortgage rates will hold in the 4.5% range for a while. And the flip to that is money market funds will pay record lows.
Cash which should be king in this credit mire will be worth less and less. There will be safety for cash but no growth. None. The whole economy has little hope of stimulus.
Obama's resurrection of FDR's deal holds no hope for stimulus. None. It will employ some and feed some but will not stimulus the economy. And that's what we need. Tax cuts and hands off are our only hope for growth and the strength to climb out of this hole.
But I look like things like college tuition increases on the horizon and medical insurance coverage costs which only climb and climb.
We have gone low enough to break backs.
'til later
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