Posted by
BerkoC on Wednesday, June 25, 2008 11:44:00 PM
So the Fed has finally decided to exercise some discretion and let the market fix itself instead of trying to create an inflationary nightmare by cutting interest rates again. I just want to note that this is something Greenspan would have done weeks ago. What does this mean? Well it means that economy now has some time to clean out all the waste that was generated by the housing and credit crunch and can start anew at the bottom. This also means that we won't see rampant inflation because borrowing money will still be set to a reasonable rate. So instead of the economy recovering quickly and then plunging us into a huge cycle of inflation, the economy will recover more slowly, at a moderate place that way inflation can stay moderate and thus we will not be victim to the issues of cyclical economics and everyone will be happy. Of course I know it will not happen quite like that, but it is nice to think that we are getting one step closer to the government taking a step back and letting the invisible hand right the issue with the US economy.