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The Fed must not condone 'irrational' market exuberance once again, as it did under your predecessor Alan Greenspan's now much-criticized stewardship.
Thirdly, one of the initial criticisms of your 'loose' money policy during the crisis was that by encouraging consumers to borrow and spend, it was merely exacerbating the behaviors that gave rise to the credit crisis as a whole, namely the tendency for American consumers to spend money they do not possess. While a near-zero interest rate for both consumers and banks may have been salutary during the depths of recession and despair, in the long-term it is necessary to encourage consumers to save as well as spend. American consumers have one of the lowest rates of saving, and the highest rates of spending, of all the major industrialized powers. This is despite the tremendous prosperity American has enjoyed as...
Americans need to reassess the balance between what they borrow and what they spend, to avoid America giving birth to a new generation of debtors.
Lastly, if the discount rate and the interest rate continue to remain low, responsible savers will find themselves unjustly penalized. Many conservative investors, particularly seniors, often use CD (certificates of deposits) as a means to have guaranteed income. CDs now hover at rates barely higher than savings accounts, while before the crisis individuals could invest their money in CDs at 4% and 5%. It is not fair that quite often the individuals impacted the most by low interest rates were those who saved their pennies and did not engage in wild speculation, or borrowing money in excess of what they had or could pay back.
Yours truly,
A concerned citizen
trace the historical causation of the current recession - the causal factors. Currently, America and most of the world is experiencing a severe recession. The causes of that recession are many, and the fallout is severe. There are many similarities with the current recession to the Great Depression of 1929, and there are differences that set each recession apart. When compared close up, the Great Depression was much worse
Future Ahead In the face of global credit crisis, it is expected that Fed has to make further changes such as cut in the more important federal funds rate to maintain stability. The pattern of growth is likely to change showing a slow down. "Mark Zandi, chief economist at Moody's Economy.com, has trimmed his forecast to show economic growth of about 2.5% in the current quarter, down sharply from 4% in
2004). The new Fed chairman would necessarily have to monitor inflationary pressures to prevent spikes in the cost of living. On this note the new Chairman would move from a policy of targeting core inflation which excludes the so called volatile food and energy prices, and focus on the headline rate which includes these components. Additionally the Consumer Price Index calculation would change to reduce the weight of housing
Meltdown Frontline looks into what caused one of the greatest economic crises in history and the ways in which the government reacted and responded. The film details the inside scoop on Bear Stearns deal, the bailout of AIG to the tune of 700 billion dollars, and the collapse of the Lehman Brothers. I watched a number of videos, one of them being "Inside the Meltdown," the first video of the Frontline
" To that end, the Treasury Department would limit executive compensation for institutions receiving "exceptional assistance" (Geithner and Summers, 2009). Troubles continued in the financial sector -- both Citigroup and the Bank of America needed second rounds of capital infusions, and federal guarantees against losses totaling tens of billions more -- while Ben S. Bernanke, the Federal Reserve chairman, warned that more capital injections might be needed to further stabilize the
Global Economy Key Player & Background As the spokesperson for an interest group representing an economic think tank, I am issuing this policy statement to detail the implications for the U.S. economy of a sovereign default in the Eurozone. As Reich notes, the financial crisis in Europe is threatening to spread to the United States. If there is a default in Greece, a panic could start in financial markets, spreading to other