Federal Reserve makes emergency 0.75% rate cut

**Swordsman** · 23-01-2008, 01:11 AM

Three-quarters of a percentage point cut biggest in recent memory

WASHINGTON - The Federal Reserve, confronted with a global stock sell-off fanned by increased fears of a recession, cut a key interest rate by three-quarters of a percentage point on Tuesday, the biggest one-day move by the central bank in recent memory.

The Fed said it was cutting the federal funds rate, the interest that banks charge each other on overnight loans, to 3.5 percent, down by three-fourths of a percentage point from 4.25 percent.

The Fed action was the most dramatic signal it can send that it is concerned about a potential recession in the United States. It marked the biggest one-day move by the central bank in recent memory.

The Fed decision was taken during an emergency telephone conference with Fed officials on Monday night. Those discussions occurred after global financial markets had plunged Monday as investors grew more concerned about the possibility that the United States, the world’s largest economy, could be headed into a recession…

Anyway i feel its too late.. they are avoiding the inevitable...US will be headed into a recession.. Nothing can save US.

**toothburs** · 23-01-2008, 01:27 AM

Agree... they were stupid enough to kept on rising the interest rate and now suddenly give it a 0.75%!!!! drop.... Biggest drop in history... lets hope they can keep it under control... or things could go bad in US then affect the whole world.

**stagflation** · 23-01-2008, 01:58 PM

Welcome to the age of stagflation!!!

Cutting rate means that oil and other commodites will rise thus living cost will go higher.However companies will earn less with higher cost of living so stock's growth will be less.In the end,stock market will drop

**Leocravensky** · 23-01-2008, 04:40 PM

To my understanding, stagflation is worse than recession...... gah... bad times ahead this year.

**restless** · 23-01-2008, 08:39 PM

wads stagflation?? is it a recession that will bring the stocks down?? or a bearish stock bringing in a recession??

**Leocravensky** · 23-01-2008, 10:30 PM

To my understanding, stagflation is a period wher by the market sentiment is bearish still where income remains still or some people may get retrench/sack and inflation is keep on increasing.

This cause a situation whereby the purchasing power of people decrease thus resulting in a lower supply of goods etc. This in return will push stock prices lower.

Its a vicious cycle and its a really horrible situation in terms of econs.

I may be wrong, please correct me if I am.

**djchris** · 23-01-2008, 10:36 PM

Interest rate cuts are just a short-term answer that does not solve the problem.

**Casper26** · 23-01-2008, 10:45 PM

They can't avoid recession, i guess.

**Swordsman** · 23-01-2008, 11:17 PM

worst case is depression right ?

**stagflation** · 23-01-2008, 11:44 PM

Stagflation is worse than depression/recession

At least in depression/recession,prices of commodities will decrease as a country is growing slowly.However,in stagflation the price of oil/wheat/gold will start rising rapidly although a country is not growing to match this inflation.Thus,you will need to spend more money on food and electricity although your pay is decreasing or remains the same.

**stagflation** · 23-01-2008, 11:54 PM

Actually Ben Bernake should do nothing or cut 0.25%.
It is a dilema for him
If he increases rate,the subprime crisis will become worse.
If he cuts rate,the US dollar will be weakened due to less people putting money in US dollar with less interest.Commodites will rise and affect the world.
Whatever Ben does,it does not solve the problem for US.
If he increases rate,only US economy will be affected.
If he cuts rate,the world world will be affected

**stagflation** · 23-01-2008, 11:59 PM

The only way to solve the problem of stagflation is to change the price of commodities from US dollar to other stable currencies like CHF or EUR which the US will not want.
The reason why US did not go into hyperinflation although they have been printing money like crazy because many countries need to use US dollar to buy commodities.If commodities are pegged to other currencies,many countries will dispose the US dollar and the US dollar will become another Banana money

**Swordsman** · 24-01-2008, 12:00 AM

wah new nick just for this o.o

**boooliyooo** · 24-01-2008, 12:00 AM

HoHoHo..

Make urself the Santa and get your hands on more money man..

**Swordsman** · 24-01-2008, 12:03 AM

Quote:

Originally Posted by stagflation

The only way to solve the problem of stagflation is to change the price of commodities from US dollar to other stable currencies like CHF or EUR which the US will not want.
The reason why US did not go into hyperinflation although they have been printing money like crazy because many countries need to use US dollar to buy commodities.If commodities are pegged to other currencies,many countries will dispose the US dollar and the US dollar will become another Banana money

ermm you are very knowledgeable, i only know China holds alot of US dollars now. roughly 2 billion if im not wrong.. if china dump it all now.. US gonna "crash"

**stagflation** · 24-01-2008, 12:07 AM

Quote:

Originally Posted by Swordsman

ermm you are very knowledgeable, i only know China holds alot of US dollars now. roughly 2 billion if im not wrong.. if china dump it all now.. US gonna "crash"

http://www.chinadaily.com.cn/china/2...nt_6172349.htm

It is more than that

At the end of Sep 2007,China was holding 1.43 trillion US dollar
Imagine China dump most of them

**Swordsman** · 24-01-2008, 12:12 AM

what the hell 1.43 trillion..

interesting website here: http://www.brillig.com/debt_clock/

US national debt is over 9 trillion... how the hell are they going to clear this ?

**stagflation** · 24-01-2008, 12:21 AM

There is no way US can clear its national debt

**Swordsman** · 24-01-2008, 12:51 AM

cost for iraq war: 1.8 trillion

thank the bush wacker...
he created this mess.
and the people re-elected him.

please send some pig heads to bush o$p$

**toothburs** · 24-01-2008, 12:54 AM

Quote:

Originally Posted by Swordsman

ermm you are very knowledgeable, i only know China holds alot of US dollars now. roughly 2 billion if im not wrong.. if china dump it all now.. US gonna "crash"

Well China will never want US economy to crash... IF US economy crash... Guess what will happen to the global?

A lot of countries are importing to US... such as China... If Nike, adidas, and the other large companies in US... stop exporting from China... then China economy will also crash and the whole global will go into depression...