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Originally Posted by kingkilburn
And what do you think happened in the 70's? We dropped the gold standard and left the FED to control the economy. They didn't do a very good job of it.
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Well this is a little obfuscating because gold money was removed from Circulation by law in 1993 a law signed by FDR. It was only allowed to be a standard for foreign currency transactions and that was finally eliminated in 1971. Though we were off the Gold standard for domestic currency by 1934.
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Originally Posted by kingkilburn
It is the world standard due to our GDP and shear amount of consumption. The FED is constantly tampering with it. Any change in the interest rate or purposeful inflation is tampering. Bailing out failed banks is tampering.
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You really have not studied the history of the FED that well or the value or importance of the American dollar. To just say its the world standard because of our GDP and amount of consumption is really not the complete picture. To say that the FED adjusting were needed is tampering shows your lack of understanding of macroeconomics which others have already tried to explain to you. Though I might not like bailing out of failed banks what you seem to have failed to realize is the bailout happened under TARP because if it did we would have gone into a depression because our banking system would have failed completely. Ben Bernanke was a student of the depression and understood the consequences and took appropriate action.
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Originally Posted by kingkilburn
I was talking about average Joe on the street. When the interest rate changes so wildly and abruptly how can he know whether to put money into savings or invest.
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Again interest rates have not changed wildly and I do not know were you getting the idea they have. They have remained relatively low even know.
Plus I will say this again the average Joe really does not have a understanding of the stock market enough to be investing in the first place. Sorry but that is the truth.
Quote:
Originally Posted by kingkilburn
Actually I didn't like it when they lowered the rates. There went all incentive for the banks to give loans and for me to save. So then the government pushes the banks to make bad loans even though it is very hard for them to make money on interest that low.
If they didn't drop the interest rate to nothing there wouldn't be this outrageous debt to curb.
Personally I would let the free market determine what the interest rates will be. They would be flexible but reasonable.
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Well it was actually Congress who pressed Fannie Mae and Freddie Mac to give out low interest loans. People like Nancy Pelosi and Barney Frank, Henry Waxman Etc... pushed for this. The banks followed after it especially Countrywide financial and Washington Mutual.
Fact is people went along with this, faking their income, taking loans they should not have. In turn this was part in parcel the creation of mortgage backed securities. Where loans were compiled good with bad and resold as a security. Problem arose in the fact that the actual value of the security was hard to pin. It also created a severely leveraged situation at some investment houses.
If we had not done TARP we would be in a depression right now and things would be a lot worse.