Fed Reserve to Hold Down Interest Rates till 2014

24 12 2011

As a CPA, I receive daily updates from the business community on tax updates, estate updates, legislative updates and many other tidbits of information.    Today I came across a WSJ article discussing the Federal Reserve holding interest rates till 2014. For some of us that is great news for others it is bad.

Great news is in the eye of the beholder. As a wrestling coach, the winner of a match gets the great news but for the opponent that news is bad. Low interest rates from a pure economic side means things are good in the market. There is low risk, low demand, and guarantees that the loan will be repaid. On the other hand, high interest rates would signal tougher economic times. The risks are higher, there is high demand for capital, and the guarantee of repayment is more likely uncertain. These are true fundamental concepts of pricing out risk and rates.

So where does this leave us. America is currently on an inverse model. Interest Rates are the lowest ever when the risk is high, the demand is high and the chance of repayment is completely uncertain. The winners are the risk takers, the spenders, the indebted while the losers are the savers, the elderly, the children and the family.

The path America is on is one of self-destruction. Holding interest rates low for excessive time while lead to malinvestment, increased debt, and another financial bubble.

When we look back in History to this time, I hope, America will have pulled out of it successfully with out the dangerous warnings that have been talked about. I hope America will realize the financial disaster that was avoided. I hope Americans will educate themselves on a better understanding of finances. I hope the individual will awake to a more confident self and believe in themselves over others.

The American people are waking up and speaking out because they feel something is wrong but do not know who to point the finger at. I say it is you reading this. (Not in a negative way but an awakening way) Take the time to learn or ask the knowledgable people in finance the questions on finance that you might not know. Ask the questions to understand the concerns each of us hold of unemployment growing, businesses closing, and more and more government regulations being handed down to small businesses.

I believe the interest rates being held down is to save the butts of the people who created the mess rather than for the purpose of helping the citizens. If the economy collapsed tomorrow will these people be considered hero’s or complete failures? I for one thing they are on the wrong path and would love to see them correct their errs.

There is only one person running for President who understands these actions and has for over 30 years in office. I truly believe he is the right man for this job. Please educate yourself on him and ask questions if you do not understand. Vote for Dr. Ron Paul for President in the Republican Presidential Primary.

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