You’re absolutely correct about the Fed. It’s in a state of denial about reality. Furthermore, what the Fed is doing is totally wrong and will only make America’s economy worse.

Reducing interest rates increases borrowing, and thus spending, but also causes inflation, which reduces spending. The price instability caused by the inflation reduces spending further. What is the rational reason for the claim that interest-rate reduction would necessarily benefit the economy more than inflation reduction and price stability?

The system itself should be addressed as the cause of the problems, simply addressing symptoms as in the article above is frivolous.

The mere fact the privately owned Fed is allowed by Congress to determine the interest rates (by printing more money and in the process devaluate the dollar) should have caused an outrage long ago.

Please please, I am looking forward to the time journalists will be brave enough to investigate and print articles on this destructive system. Or are you being held back? (rhetorical question)

Living outside the US and watching this is not helping. People around the world see Investment in the US a joke. There are investors putting their money in Foreign Banks while the US suffers. What happened to our Dollar? TIme to replace it?

Why aren’t people with Student Loans and Credit cards seeing a reduction in their loan rates? Why won’t Sallie MAe or Citibank drop my rates? They wont! The rate cuts only help businesses who are unwilling to admit they tried to profit and failed. Now, the common people have to pay for their failed investments. I am so tired of hearing rate cuts, rate cuts.

Is the Fed in a state of denial is a ridiculous question. The Fed, along with other Feds is orchestrating the whole thing in order to expropriate more wealth for itself. Wake up!

The Fed statement is part of the ‘confidence rebuilding’ strategy. All of Wall Street, the Fed, the Treasury are all involved in convincing people that the worst is over, to help reliquify the credit market. Even if he doesn’t completely believe his own words, Bernanke is hoping this is one case of wishful thinking which will actually become reality.

Could it be that the Fed is in a difficult situation because as if It is not “allowed” to speak up its mind? Otherwise it could just be setting more wood in the fire? And yes, people are clueless about the remedy to the problem. Guess what? It is spiritual!

Mr. Bernanke’s hope is that if you say it often enough, people will believe it. Inflationary pressures are also fueled by perception; if people think prices are going to rise, they will - it’s self-fulfilling…I’ve always seen people and companies that relied solely on debt to finance their lives/operations ultimately fail. How long can the US economy continue in this fashion?

“I am a most unhappy man. I have unwittingly ruined my country.
A great industrial nation is controlled by its system of credit.
Our system of credit is concentrated. The growth of the nation,
therefore, and all our activities are in the hands of a few men.
We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the civilized world. No longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men.”

-Woodrow Wilson 1916, after the sigining of the Federal Reserve Act

The whole “sup prime problem” was initiated by the same economic big shots who knew perfectly well that there 8 year party of fiscal irresponsibility might come to the end with the end of George “floppy-eared-fool” Bush. Therefore they began the process of removing the money they had accumulated over those 8 years. Now trying to find a scapegoat for the mess they created, they will try to blame the Fed for the problem they themselves created. The main problem is Capitalisim, and the money makers who support it, They know eventually the middle-class will pay for the financial mess they created.

The more you have, the more you can borrow. Cheap money for the rich, and nothing but inflation for the poor.

The Fed has been left behind in the evolution of the economy over the last 10-15 years or so. I do believe that the Fed is now just a tail on a dog that can and does decide it’s own destiny and the Fed’s inputs and opinions to it are largely predicted and absorbed, causing only a small ripple in the big pond that is now the US and world economy. The old school will probvably argue with this but it is plain to see that there are far larger forces at play here e.g. the price a oil is a more potent market shifter than anything the Fed can come up with at this time…

Absolutely right. It’s funny that no-one can see that the Fed is the Origin of all of these problems. People uphold it as a supreme safeguard that cannot but do good–I would have them think a little differently.

WHEN BANKS ARE IN TROUBLE, THEY SIMPLY CLOSE AND DECLARE A ‘BANK HOLIDAY.’ WHY CAN’T CONSUMERS DO THE SAME AND DECLARE A ‘MORTGAGE HOLIDAY.? IMAGINE, IF YOU WILL, ALL MORTGAGE HOLDERS NOT PAYING THEIR MONTHLY PAYMENTS FOR ONE OR TWO MONTHS. DO YOU THINK THE BANKERS OR THE GOVERNMENT WOULD THEN LISTEN???

I understand the Fed is trying to increase the money supply to stimulate borrowing and spending, but the problem is with the banks, housing prices and mortgages. Until housing prices stabilize and people either pay down or foreclose down to that level and the banks increase confidence in the buyers, we are going to have problems. We haven’t hit bottom yet and we have a long way to go. I think the Fed is hoping the weakened $ will encourage foreign investment and boost exports, while the interest rate cuts help keep the banks afloat.

I would think that you would have included the election year, as one of the reasons the Fed is in denial. I very often see a hint of the Right in most of CNN’s reporting. With all the election news CNN has that should have stood out like a sore thumb

I can actually see where Bernanke is going with his somewhat subdued comments. People have to realize that anything he says can be spun around to mean anything. Words by any Fed Chief, considered cryptic by many, do influence and send signals around the world.

I think he is trying to prevent a panic from happening and further deteriorate not just the US economy but the world economy as well. He is trying to strike a balance with confronting the situation but not creating a “doom and gloom” scenario. The same thing happens with financial analysis and forecasts of any asset. If analysts are too optimistic and a stock fails to meet those expectations, it could create a downward pressure on its price. Words have power, especially if they’re someone important like Bernanke.

Fed Strategy - hold off an the perception that we’re in a recession until after the election. How can McBush get elected when his GOP predecessor has two recessions in 8 years hanging over his head? Denial is right, but it’s willful strategic denial.

I think the Fed was nuts to lower them again. The interest rates are low enough. Leave ‘em there for a bit - that should let the dollar stabilize and perhaps increase in value again, which should help deflate the energy prices a bit.

Best thing that could happen these days is get oil out of the commodities market.

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