Is The Fed Rate Cut All It’s Said To Be
I never get involved in economic news. It would be akin to me offering you my skills as a brain surgeon. But I have heard so much in the past few days about this rate cut as being THE SOLUTION for all the bad things that have happened to the economy, I felt compelled to offer this “Unleash Prosperity” post. I do know that miracle rate changes just before an election that may appear to move the needle screams political BS and manipulation. So I leave it to you to ask someone that is an expert. This was sent to me by a good friend and fraternity brother who has been looking at the economy for five decades. If it got his attention that is certainly good enough for me.
Sorry! Fed Rate Cuts Don't Cause Prosperity
The stock market is exuberant over the Fed's decision to cut the federal funds rate by 50 basis points, but hold on. The chart below sent to us by the economics team at Chase Investment Counsel examines the past six initial Fed rate cuts and found that in two of the six instances, the stock market FELL over the next year. And in another two instances, the market was positive - but not in double-digit growth territory.
If Washington wants to stimulate economic growth, it should cut TAX rates, not interest rates. Money creation doesn't create prosperity.
