Federal reserve cuts rates by 0.75%
Tuesday, January 22nd, 2008“Too little too late” This is the phrase that I’ve been hearing continuously in the news both for reaction of the government to stimulate the economy with tax rebates, and today with the federal reserve decision to cut the interest rate by 0.75%.
Why does the federal reserve need to cut the rate? Our economy is based on ever increasing credit. If people don’t borrow, there will be no money i.e. DEBT=MONEY CREATED IN THE SYSTEM. The reverse is true, repayment of a debt destroys the money created, which is the same thing that happens when a mortgage goes to foreclosure - the money gets destroyed.
