Fed Rate Cut: Bernanke’s Silver Bullets
May 2nd, 2008 | By Rick Pendergraft | Category: Politics & EconomicsThe Federal Reserve made another quarter of a point rate cut yesterday, bringing the target Fed Funds rate down to 2%. This makes 3.25% the Fed has shaved off the rate since last summer.
At this point, Ben Bernanke has to feel like Barney Fife. Remember how on the Andy Griffith Show, Andy only gave Barney one bullet and he had to keep it in his pocket? Mr. Bernanke has to feel like he is running out of bullets and needs to keep them in his pocket.
The economy isn’t improving the way he had hoped. With the cuts being done in 25 basis point increments, the most the Fed has left is nine. Of course, they could go the same route as the Bank of Japan and start cutting by 10 basis points.
It won’t be long until the Fed has to make inflation the main concern and at that point, they will have to make moves to strengthen the dollar. This would help counter act the tremendous rise in oil prices.
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Rick is currently the Editor-in-Chief of The ETF Options Trader and the Triple Wave Investor. At the age of 23, on the third options trade he had ever placed, Rick turned $1,800 into $22,000 in less than a week, when the company he bought became the target of a takeover. He admits it was a stroke of luck, but it was a memorable education as to the leverage that options can provide. He lives near Delray Beach, FL with his wife and three children.
