Angry About Fed Rate Cut

OK, I’ve waited a couple days to temper my words on the subject of the Federal Reserve Bank’s recent emergency rate cuts … but my feelings have not gotten any milder yet.  I am angry!

First, this affects me in a NEGATIVE way.  This may sound strange considering I am not debt free yet.  But seriously, my mortgage is a fixed rate and hubby’s stupid truck note is also fixed.  Our credit cards are gone, but the Fed’s rate cuts won’t have an immediate effect on those anyway.  I have no plans whatsoever to run out and finance ANYTHING.

What this does affect, both immediately and negatively, is my money market account.  Every time the Fed does a rate cut, my interest rate goes down.  Granted, I only have my baby emergency fund and it’s only $1600 but still I am seeing a big difference from what it earned back in the summer just six short months ago.

Aside from the negative impact on my paltry little savings, I have to ask: HAVE BERNAKE AND THE FED LOST THEIR MINDS???  Isn’t this whole problem caused by too much credit?  Over the last six months or so I have read about the subprime mortgage fiasco, now I am reading about how credit card defaults are up (yahoo’s article “credit card crunch” here for those who don’t like CNN Money)!  Those are examples of being overextended in credit.  So the solution is to make credit easier to obtain?  And cheaper?  Am I the only one who sees something wrong with this picture?

Let’s not forget about inflation either.  Isn’t the Fed supposed to be guarding us against inflation?  Every time the Fed cuts the rate, I read about how the dollar has fallen against other currencies … so they must be related although I am not sure how.  When the dollar falls, inflation goes up … especially since the U.S. has lost a good portion of its manufacturing base and instead mostly imports goods.  Inflation is a huge concern for me since I started doing a budget!  Gasoline and groceries have both risen over the past year, and I personally do not want them to eat up too much of my monthly income.  I doubt many of you want to see those two necessities to skyrocket either.

Wednesday’s rate cut looks like it was done just to ease the stock market and prevent a serious correction.  That’s what it looks like to me down here in the trenches at least.  It FEELS like it was a measure to make people far richer than I am feel better … while making my economic picture a little more difficult!  Again, am I the only one who sees something wrong with this picture?

The bottom line as far as I can see is this latest rate cut does not help me at all.  Worse yet, it could hurt me financially for several months.  It doesn’t even look good for the economy in general, from my point of view … it seems more likely to prolong our current credit problems!  How can this be a “good thing”?  Am I really the only one who sees a problem with this picture?

Standard disclaimer:  I am definitely not an economist, just an over-educated pizza delivery driver.  If you feel I have made some grievous error feel free to correct me.