Not from
Wall Street to Main Street?
Hello:
The Federal Open Market Committee (FOMC) is walking a tightrope between economic
slowdown and runaway inflation. Although the media is wary of using the word
"stagflation" it does appear that the US economy is at risk of heading
that direction.
What's an FOMC to do? If the they raise interest rates, then inflation may
be slowed, but then the economy might tailspin into a full recession. If the
FOMC lowers interest rates more, they decrease the risk of an economic slowdown,
but increase the risk of runaway inflation.
But hold on. The banks and credit card issuers are not passing on the lower
interest rates to the consumer, so lowering interest rates is not having the
usual effect of stimulating the economy. So why not pause in cutting rates?
``The central banks are taking a pause, but that could turn into a permanent
end to rate cuts,'' said Thomas Mayer, co-chief economist at Deutsche Bank
AG in London. ``The risk we won't see more cuts from the Fed and Bank of England
has grown, and markets have pushed out expectations of ECB [European Central
Bank] easing.''
Therefore, I would not be surprised if we are near the bottom of interest
rates for the near term.
Are your friends' and relatives' advisors retiring?
Perhaps they would like to meet your people. Ray and I plan to be around for
many, many more years. Why keep us a secret?
Terri
G. Millson, CIMA, CIMC
President |
Ray
Dicius, CSA, GEPC
LPL Branch Manager |
05/19/2008