It looks like the Federal Reserve will be hard at work this week to make some major moves to help the US economy and it’s consumers to fight off the falling recession numbers and turn the corner. There are a couple of moves that are being discussed and possibly being voted on this week that will hopefully be a boost to the consumers not only in confidence but in their wallets for 2009.
The first of these Federal Reserve votes is the unprecedented move to cut the funds rate again this time by an estimated 50 basis points. This would bring the rate to a new all time low of .50%, but more importantly will be a move by the Federal Reserve to start quantitative easing. I read this and I thought what the heck is this mess that they are talking about now. So I did a little research and found that this “quantitative easing” terminology means that the big bank is going to start printing a lot more money for all the other banks so they will have no risk of running out and they can continue to lend more money to the consumers.
I try not to get to deep into the economics pool as it starts to get really complicated when they start talking about billions and trillions of dollars. The thought of printing more and more money to lend to people that are already in debt up to our eyeballs doesn’t really sound like a solid road we should be traveling down. Plus more money in the market? Wouldn’t that just drive the value of the already tanking US dollar even further? Again I am probably way off on this and thinking of it too simply….. right????
The other Federal Reserve move that seems to be getting a lot of press this week is the impending vote to reform the way credit card companies are conducting their business practices. The sweeping changes and there way to many to be listed but some of the main points that I have seen mentioned in most of the articles are these. We as consumers will be seeing easier to read tables on our statements for one. The reforms will also address those sneaky fees, shorter payment periods and possibly outright ban on universal defaults.
Hopefully the Federal Reserve will follow through on both of these votes and get these plans into action. I hope that by the spring of 2009 we will see some positive signs from the moves that they are about to make and we see the markets start to make that turn towards recovery. I would be very interested in any one’s perspective on what the Federal Reserve is about to do this week and if you think it will be enough or do they still need to do more?
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