I don’t get it
Well today the Federal Reserve unexpectedly lowered the benchmark interest rate it controls by a whopping .75 percent, from 4.25% to 3.5%. A lot of people are happy, but I am just left scratching my head. If the subprime mortgage crisis that we are still feeling the effects of was caused by artificially low interest rates and too much borrowing, how is lowering the interest rates drastically going to help? It will encourage more risky behavior, and we’ll just be going deeper in debt. It is like a drug addict trying to quit but who keeps on needing a “fix,” in this case cheap money.
Meanwhile my savings accounts are continuing to give lower and lower interest on balances.