It’s Groundhog Day on Wall Street: The Fed has cut interest rates for the fifth time since last September.

This time, the Fed cut rates by three-quarters of a percentage, a smaller reduction than many investors expected.

The Fed funds rate is now at 2.25%, three percentage points lower than its mid-September level.

“We take as a given that central planners are as prone to error as a bear to honey,” says Bill Bonner.

“It also seems likely to us that it was a mistake for Alan Greenspan to cut rates so aggressively in ’02-’03 and leave them below the inflation rate for so long. The result was an orgy of spending and borrowing in the Anglo-Saxon economies…and an orgy of factory-building and capital formation in Asia. In both parts of the world, people missed their marks – overdoing it considerably.

“And now there is Hell to pay.”

“We face a recession stemming from the modern-day version of credit spending,” says penny stocks expert Jim Nelson.

“You see, credit gives investors and homeowners alike the assurance that they are worth more than they really are.

“Over the past few years, Americans have been spending as if they had money, saving as if they didn’t need money and slowly dealing with higher prices at the grocery store because they have to. This simply cannot go on much longer.

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