Fed May Finally Be Finished Raising Rates

[NVMojo]

WASHINGTON (AP) - The Federal Reserve may finally be ready to halt its two-year campaign to raise interest rates, but with soaring energy prices threatening to make inflation worse any pause may be temporary.

The central bank has not missed a chance to boost interest rates since it started the current credit tightening campaign in June 2004, the longest stretch of Fed rate hikes in recent history.

It has nudged the federal funds rate up by a quarter-point at each of 17 consecutive meetings, going from a 46-year low of 1 percent to the current level of 5.25 percent.

That trend could change Tuesday.

more...

http://www.lasvegassun.com/sunbin/stories/bw-other/2006/aug/08/080805943.html

[customerserviceguy]

1. I never did really understand this shit

way back in economics classes. The price of something (energy) is going up, so let's stop that by raising the price of something else (money).

[colorado_ufo]

2. Thanks. I feel better.

I thought it was just me.

[bemildred]

3. That's because it's bullshit. nt

[melm00se]

6. the theory is (as I understand it)

an increase interest rates, "decreases" the available money in the economy, slowing the use of money which in turn slows down the economy.

This is a "macro" move to make a "macro" impact.

Unfortunately, all of us have micro wallets and live micro lives so the direct and immediate impact to our day to day lives is not really obvious.

[customerserviceguy]

7. Yeah, I remember all that shit, too

the idea that government has to take money out of the people, so they have less of it to drive the price of other things up. It's just that higher interest (and higher taxes for this purpose, which was what the surtax was back in the 1960's) are just viewed as another cost people have to pay, that they need to demand more wages for.

No wonder Thomas Carlyle called economics "the dismal science".

[MiniMe]

4. At least until after November. n/t

[nolabels]

5. Fed May Finally Be Finished

Forget the rates, with a monkey as your leader you are finished :P

[sendero]

8. The idea that the ..

... halt (probably temporary) in interest rate increases is some kind of "good news" is pretty uninformed.

It means the economy is slowing down. It wasn't going that fast to begin with. The Fed is walking a tightrope, with disaster on one side and catastrophe on the other. It's not pretty.

[bemildred]

9. Yep, gonna crash the housing market bubble if they keep going up.

Going to crash the dollar if they do not.