This is a guest post from Ana of DebtFREE-Revolution. After adopting the Dave Ramsey method of debt-repayment, she’s clear of everything but the mortgage! Congrats, Ana! For her guest post, she’s chosen to voice the concerns that a number of us are feeling about the economy. If you like it, check out her blog or click here to subscribe to her feed.
Dear Federal Reserve Bank: I cannot really afford another interest rate cut!
Really, I can’t. Every time you have cut the interest rate so far this year, it has been quickly followed by headlines of this nature:
“Dollar hits record low against (insert other currency here)!”
“Oil hit record price of (insert today’s price)!”
“Gold surges to new record!”
Please do not snow me with your inflation numbers to defend your rate cuts. It is pretty well-known to anyone inclined to look it up that you strip energy and food prices out of your inflation models. I really don’t understand how you survive without eating or putting gasoline into your vehicles, or heating your homes. I have to do all of those things, so inflation feels a whole lot bigger than those numbers you cite.
Please do not try to claim that this is the way to head off a recession. Business cycles are cyclical, which means at some point they contract just as they grow. Continuous growth is something bacteria does, not economies. Plus, isn’t the current “credit crisis” caused by too much debt? And doesn’t lowering the interest rates encourage more debt? So how is more of the problem the solution?
I DON’T want stagflation, which is where it looks like you are steering us towards. I am barely old enough to remember the pain of the late 70s and early 80s, but I do know it took a lot of interest rate hikes in that time frame to finally tame the stagflation and bring the dollar back up in strength. Mr. Bernake, you are an academic so how can you not see the parallels here?
So please, Federal Reserve Board and Mr. Ben Bernake: PLEASE raise the interest rates. I am trying to save up a decent emergency fund, so I never have to use debt again in my life (except maybe a small mortgage once the market hits absolute bottom for my area). I want the dollars I earn to actually buy useful things for my everyday life, like gasoline and food.