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Federal Reserve Cuts the Interest Rate, Again in New Issue of Money and Markets
Jupiter, Fla. (PRWEB) May 2, 2008 -- Martin D. Weiss, Ph. D. discusses the recent interest rate cut that was made by the Federal Reserve in this issue of Money and Markets. Dr. Weiss takes a closer look at the reasons for the Fed's recent actions.
On April 30, the Federal Reserve cut interest rates by a quarter-point to make a dent in the high rising energy costs, surging food prices and double-digit import inflation. However, for the Fed to make a real difference, it would have to raise rates above and beyond the level of inflation. Even using the government's CPI, inflation is running at 4%. And with the recent cut, the Fed funds rate is only 2%.
That means the real interest rate (minus inflation) is a full two percentage points below zero. Money here in the U.S. isn't just low-priced. Instead, lenders are actually distributing the money, and, after adjusting for inflation, they're effectively paying borrowers to take it off their hands. That shows how far the Fed has gone to drive rates down and how little they've heeded the warning signs of potentially rampant inflation.
This happened once before in the late 1970s. And that time it created such overwhelming inflation that consumer prices, even as measured by the government, were soon zooming at a double-digit pace, the worst inflation since the Civil War. Regardless of what may happen in the short term, this is probably not good for the U.S. dollar.
"As long as real interest rates in the U.S. are below zero, and as long as the Fed's actions to defend the dollar are little more than talk, the dollar's ultimately doomed to much deeper declines. The best defense is a solid offense, turning this situation into a potentially magnificent profit opportunity," Dr. Weiss states.
To read this issue online, please visit: http://www.moneyandmarkets.com/Issues.aspx?Fed-cuts-again-Dollar-doomed-1723.
About MARTIN D. WEISS & MONEY AND MARKETS Martin D. Weiss, Ph.D., founder and president of Weiss Research, Inc. and a leading advocate for investor safety, is a nationally recognized expert on domestic and international financial markets. With more than 35 years of experience, including many years in Latin America and Asia, Dr. Weiss has helped empower millions of investors to make better financial decisions through his monthly Safe Money Report and daily Money and Markets.
Dr. Weiss' keen understanding of foreign markets and the global economy has earned him a reputation for thoughtful, in-depth analysis that investors can rely upon to make informed financial decisions. Regularly called upon by the media for his independent investing guidance, he has been featured in publications nationwide, including The Wall Street Journal, The New York Times, Chicago Tribune, Investor's Business Daily, and Forbes and has also appeared on CNN and CNBC.
Throughout his career, Dr. Weiss has been an advocate for consumers and investors in the insurance, banking and brokerage industries, dedicating his time and resources providing analysis and data for Congressional testimony, constructive proposals for reforms in the securities industry and legislation for full financial disclosure as well sound accounting and fiscal policy. In November 2004, he launched the Sound Dollar Committee, a nonprofit organization dedicated to building a network of investors seeking to protect the nation's future by demanding honesty in government accounting, a balanced budget and sound economic policy.
Dr. Weiss is author of The New York Times best-seller, The Ultimate Safe Money Guide, which gave baby boomers a road map to grow their wealth safely. It was listed on the New York Times Business, Wall Street Journal, and BusinessWeek best-seller lists, as well as the Barron's Roundup for 2002.
Dr. Weiss holds a bachelor's degree from New York University, a Ph.D. from Columbia University and is fluent in eight European and Asian languages.
Money and Markets (www.moneyandmarkets.com) is a free daily investment newsletter from Dr. Martin Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Weiss Research, Inc. is located in Jupiter, Florida. For more information about our editors, or to set up an interview, please contact Jennifer Moran at 561-627-3300 or visit www.moneyandmarkets.com.
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This press release has been reprinted from PRWEB per the terms and conditions of the copyright notice.
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