Sunday, May 4, 2008

The Debts of the Spenders: Behind the Fed's Policy of Rate Cuts

The Fed is afraid of deflation. Deflation gets rich people mad - it hurts people with assets the most (all their assets get devalued - think Great Depression). Inflation, on the other hand, focuses its hurt on lower and middle class - it hurts people who consume. So you can guess which side the Fed is erring on (not the peons). It's either that... or they are truly believing the numbers coming out of the government about inflation (no problemo!)... I don't know which of those 2 thought processes that the Fed brain trust seems to be using... to fear more.