Another Rate Cut – What Does This Mean to Me?

IF THE FED CUTS THE RATE BY .50%, SHOULDN’T MORTGAGE RATES LOWER, TOO?
 
Not necessarily!  Over time, the long term mortgage rates will be impacted by what the FOMC (Federal Open Market Committee) does with the FED (Federal Funds Rate) rate The short term impact is seen more in how the stock market reacts.  Why?  The mortgage bond and stocks compete for the same dollar-typically speaking. So, if the stock market is up, rates are up (because the mortgage bond is down).  
 
THIS IS THE 9TH FED RATE CUT IN 13 MONTHS – Why did the FED cute the rate – AGAIN?
 
“The pace of economic activity appears to have slowed markedly, owing importantly to a decline in consumer expenditures,” the Fed said in its policy statement. “Business equipment spending and industrial production have weakened in recent months, and slowing economic activity in many foreign economies is damping the prospects for U.S. exports.” Ben Bernanke, FOMC Chairman
 
ANOTHER BAIL OUT? STAY TUNED…
 
Commentary by Bernanke 10/29/08: “…with the economy likely to be weak for several quarters, and with some risk of a protracted slowdown, consideration of a fiscal package by the Congress at this juncture seems appropriate.”

According to G. Edward Griffin, the author of “The Creature from Jekyll Island”,  “The final solution on behalf of the banking cartel is to have the federal government guarantee payment of a loan”….via Congress.  Mr. Griffin believes that the parties involved in the Federal Reserve have to convince Congress that without a bail out, the economy would be in danger.

DO YOU BELIEVE OUR ECONOMY WOULD FAIL IF THE GOVERNMENT DIDN’T SIGN OFF ON THE BAIL OUT?

Please post your comments – I look forward to what you have to say!

Links:
http://www.federalreserve.gov
http://www.econmodel.com/classic/terms

 

Megan McDonald, Licensed Mortgage Planner
Excel Home Lending
383 Inverness Parkway, Suite 140
Englewood, CO  80112
Cell: 303-717-9995
Fax: 303-468-6133
www.excelhomelending.com
www.mcdonaldlendingservices.com 

Financial Literacy Club Interactive:  Utilize Meg’s Blog to discuss the Federal Reserve – What do you know about our monetary system?  How does this system impact you?
 
Book (Optional):  “The Creature from Jekyll Island”, G. Edward Griffin (4th edition/2008)