US Federal Reserve To Cut Interest Rates Until Dow Hits 20,000

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The credit addicts on CNBC have got to be flying as high as they’ve ever flown before. The minutes from the Federal Reserve’s last meeting were made public yesterday and Wall Street revelled in the implied monetary largesse like a pig in first-class gravy. The Fed didn’t promise more rate cuts. But it did say that that inflation is not as big a worry and that, “Further actions would depend on how economic prospects were affected by evolving market developments and by other factors”.

Allow us to translate the Fedspeak: “Blah blah blah blah. We’ll keep cutting rates until the Dow reaches 20,000. Blah blah blah blah. Do you feel rich now that your stocks have gone up? Good! Maybe you won’t notice the US dollar has become a third world currency and the housing market is a shambles. Blah blah blah. Thank you, you credulous moron. Blah.”

Aussie John is getting into the personal loan market. “Yesterday, [John] Symond announced Aussie’s entry into the AU$2.5 billion-a-month personal loan and car finance market, a move that some many consider down-market but others may see as a necessary step towards being a serious financial services house,” reports Anna French in the Australian.

Great. Just what people need. More debt. What’s next, throwing bricks at a drowning man?

Most of the big lenders in the States are in the auto and personal loan business, too. Who says feudalism needs castles and serfs and land to work? What you really need are lenders, borrowers, and a central bank willing to underwrite the enslavement of the people. Welcome to your credit servitude.

“Federal Reserve data released on Friday showed US consumer borrowing rising by US$12.18 (AU$14.2) billion in August, more than 20 per cent more than economists had forecast,” reports Reuters. Borrowing on high-interest revolving credit lines increased by over eight percent. It was the sharpest increase since 2002.

The downside to this news is obvious. Americans are borrowing on credit to pay for living expenses and assorted junk they could live without. Whether the borrowing is out of necessity or is instead some kind of compulsion to accumulate crap in order to feel more secure, we can’t say. But it is not a healthy trend.

Do you think there’s something to the idea that a nation can exhaust its creative energies? Or that nations go in life cycles… birth, youthful exuberance, rowdy adolescence, young adulthood, the prime, the decline, senility, and death? Is America past its prime? And where is Australia in the life cycle of nations? Just wondering…

Dan Denning
The Daily Reckoning Australia

Do you think America is past its prime? How about Australia? Leave a comment below.

Dan Denning
Dan Denning examines the geopolitical and economic events that can affect your investments domestically. He raises the questions you need to answer, in order to survive financially in these turbulent times.
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Comments

  1. how is such a thing measured?

    CPI, GDP, employment, purchasing power, distribution of wealth, industrial output, consumer confidence……

    i dont think these conventional measurements are reflective of a rich and sustainable society..

    if we can measure it then we can answer the question, but first question is – how do measure it?

    chris barrow
    October 10, 2007
    Reply
  2. Is America past its prime? Yes, I think so. Here’s why.

    For most people in the world, you have to earn a living through work, much of it very hard (think of Chinese farmers carrying wet cement all day on their shoulders) and very long (16 hour days without end). And the developing nations (like China and India) realize that money doesn’t grow on trees–or helicopters–and must be earned.

    The above attitude contrasts sharply with the American view–short hours, playful work, mucho benefits, lots of vacation time, and oodles of cash to spend, spend, spend. I think that people in the US think that it’s OK for the poor Hispanics who just crossed the border to work hard, but not for the rest of us–for us, we deserve free time, lots of money, constant spending, and lots of time to drool over mindless TV programs and movies.

    Is the US past its prime? Yeah, boss, way, way past. We’re into our second childhood.

    Reply
  3. Australia isn’t past its prime, because its economy has been saved, once again, by demand for raw materials which the land so fortuitously possesses. Truly we live in the lucky country, since every 20 years or so we get to win the resource lottery. This bails us out of a balance of payments deficit problem caused by our massive personal consumption spending.

    Reply
  4. Well, Amerika is a rich society and relatively free and open.

    However, the bootlicks in Washington-(orgy of delusion) are addicted to squandering tax receits on their friends, corporats, and vote buying schemes.

    Frankly, the dollar is in the toilet, and frankly will never
    see the light of day again. It would be smartest just to flush the toilet and start over while the plumbing might still work.

    But, it ain’t history. How much longer can the wall street rip-off game last ?

    Reply
  5. Yes, the US is past it’s prime, like the end of ancient Rome, where it doesn’t realise that it needs to adapt to a changing world. A clear sign is that it believes it is all wise and impregnable, and everything in the US is perfect. The healthcare system is great, social security is fine, we are winning the war (despite sending increasingly more petrodollars to assorted bad guys who support the enemy), budget deficits can go on forever, the tax systems are perfect, the education system is the best in the world and there is no inflation (at least the way we measure it). The 21st century will see the ascendancy of a smarter, harder working China. For Australia to stay young it needs to keep innovating and adapting with taxes, healthcare, social security, education and expanding infrastructure, while keeping governments small, efficient (ideally with smaller or no state governments) and supportive of new and existing small businesses.

    Reply
  6. I disagree with some of the previous comments. My family has had to use credit in order to survive. We don’t have useless junk, I got this computer I’m typing on for free from a nice relative. When you’re earning 2000 a month, paying 700 a month in rent, power, car payment, insurance, student loans etc. it can become difficult. Why do we have a car payment? Because we could afford it before rent rates increased along with real estate in our area while wages for my hubbies line of work haven’t increased since 1982. We don’t have any extra, my husband works 12 hours a day Monday through Friday without a lunch break and not at a desk job. To say that Americans are lazy, work short hours, and expect to have lots of stuff isn’t true in my neighborhood. Most of the people I know in our income range have had to use credit cards to buy groceries, and unfortunately that leads to an impossible dilemma, even more debt slavery.

    The Fed is as federal as Fed ex
    December 12, 2007
    Reply

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