Will the Fed risk "overheating" the economy today with another rate cut??

[Roland99]

http://www.marketwatch.com/news/story/us-employment-costs-rise-08/story.aspx?guid=%7B931E0826%2DD58C%2D4171%2D9D86%2D37C3A3EA7A5A%7D

The Fed pays attention to employment costs in the belief that inflation can only be sustained if workers force their bosses to pay higher compensation, which is then passed on to customers in the form of increased prices.

The fact that the latest measurement of such costs did not accelerate in the third quarter may make it easier for the Fed to cut interest rates at their meeting later Wednesday. A statement from the central bank is expected at 2:15 p.m. Eastern time. See full story.

The consensus forecast of Wall Street economists is that the Fed will cut interest rates by a quarter of a percentage point, to 4.5%, in a further effort to counter the depressing effects of the housing market downturn and the credit crunch.

Soo...we're told that GDP grew at a very healthy 3.9%. If that's TRULY the case (which I VERY seriously doubt as we know in the last couple of years, a huge portion of GDP growth came solely from MEW - Mortgage Equity Withdrawal - which has all but completely disappeared). Anyway, IF GDP is really at 3.9% in Q3, then WHY IN THE HELL would the Fed even consider cutting the rate right now? Isn't 3.9% almost an "overheated" economy?

Cutting rates to boost growth would surely cook the books...er....overheat the economy, right? I mean, we'll have employers BEGGING people to come work for them for minimally $20/hr with full health insurance and a guaranteed pension. People will be buying new/existing homes left and right! LCD TVs will fly off the shelves! DisneyWorld will be busting at the seams every day! Restaurants will have to hire more staff and grocers will have to build more stores.

Ahhh...Utopia!




How fitting that the music I'm listening to now is the theme from Psycho!!

[nashville_brook]

1. of course they will! given the chance, they will always choose the quick/wrong path.

[Roland99]

2. It's anything to save the markets right now. Save the uber-rich, the banks, and mega-corps.

Ah...the Roaring 20s revisited!!

[magellan]

5. And we know how the Roaring 20s ended

The Fed can protect the markets from revisiting that time, to an extent. But they can't protect the economy from what they've wrought, and that will eventually impact the markets too. However, it won't be the uber-rich and corporations who suffer the most, but us peasants. The non-investor class. The average American family.

The elite have made the mistake of believing us expendable. I think soup lines full of angry former middle class Americans with pockets full of useless currency will change their minds.

[Roland99]

7. I still don't see how they could boldly produce nearly 4% GDP growth numbers.

That's insanity...something is WAY skewed in how that is calculated.

[whistle]

3. Helicopter Ben Bernanke would just love to drop trillions of dollars

...on America's front lawns and doorsteps and send the economy into hyperinflation.

<SNIP>
Hyperinflation is Good for America Says Ben Bernanke
Written by Felix Minderbinder
19 September 2007

The chief of the Federal Reserve says "hyperinflation is good for America" in an exclusive interview with FMLiveWire.

"Yesterday I dropped interest rates half a point in order to bail out our Wall Street friends, the investment banks, hedge funds and other wealthy patricians," said Ben Bernanke. "This will help kill the value of the US dollar and start us down the road of hyperinflation."

"It sure will not help the indebted homeowners though, who had better get used to living in their cars once they have been foreclosed, that is, while they can still afford gas," he continued.

Bernanke said that he had studied the financial system of Weimar Germany in the 1920s and present day Zimbabwe and has accepted their hyperinflationary policies as the appropriate model for the USA.

"Hyperinflation will allow the US to destroy its massive unsupportable trillion-dollar debts, the same way that the Weimar Republic destroyed its reparation burden. Thus, my printing presses are working overtime now churning out greenbacks so that way too much money can chase goods and serves and cause prices of everything to skyrocket."

He noted that falling interest rates and the growing money supply will dramatically boost the stock markets the same way they did in Germany, but "it won't be worth a damn."

The Fed chief said he was personally "loading up" on hard currency like gold and silver as the only way to prosper as the value of the fiat dollar and other assets falls to zero.

"Better get those wheel barrows ready folks to carry your Deutschmarks, I mean greenbacks, to McDonald's for a Big Mac!" he laughed.

http://www.thespoof.com/news/spoof.cfm?headline=s8i24839

Of course this is a spoof article, but it does reflect what may in fact be really going on inside Bernanke's head right now.

[sicksicksick_N_tired]

4. They believe our economy will infinitely bend without breaking.

Or, so they say they believe. I doubt they care since IT'S NOT their asses being ground to a pulp.

[tom_paine]

6. They have to keep the juggling balls in the air until they can leave

or maybe they don't even care about that, since once all the pieces are in place an a "national disaster" happens, the Bushies will have carte blance for all sorts of sate-sanctioned criminal activity up to and including Right-Wing Death Squads and Blackwater Murder Squads.

Hard to say, except that Amerika is being positioned so that the Wealthy Aristocracy will be as little harmed as possible by the coming collapse.

[Roland99]

8. Well, they ended up just a little ball handling instead of a full reacharound this time.