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Why The Fed Rate Cut Will Inflate The Stock Bubble – And Cause It To Pop

me1004
  |     |   1,381 posts since 2010

Good and interesting point in this article, noting that a Fed rate cut cannot improve the economy when the problem is a disease.

A Fed rate cut is not going to do anything to eliminate quarantines, it is not going to make anyone think it is safe to board an airplane without risking death from coronavirus. It is not going to get anyone to take a cruise ship for the same reason. It is not going to get anyone to reschedule their conventions that they canceled over fear of coronavirus spread. It is not going to get supply chains from places like China going again when the factories are shut down in entire regional quarantines and travel, including cargo, is not operating for fear of spreading the disease.

In short, a Fed interest rate cut is not a medical treatment or cure. The story is saying the Fed rate cut is stupid, and will only further inflate a stock market bubble that was already going, and cause it to crash sooner and harder -- for there will not be any boost in the economy to match it and support it.

https://www.ccn.com/why-the-fed-rate-cut-will-inflate-the-stock-bubble-and-cause-it-to-pop/

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buckeye61
  |     |   454 posts since 2011
Good summary of the article! Bottom line is that FED has very limited tools to combat the likely economic downturn or even a recession. A stock market correction is normally a healthy thing, but we live in times when everyone seems to panic when the Stock Market isn't going up. Hopefully, this Virus will get under control sooner rather then later and the effect on the global economy will be less severe.
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July2022
  |     |   41 posts since 2018
The Fed still has plenty of tools. If those Federal Reserve folks bring their lunch to work they can throw a tuna salad sandwich at it!
They can use the stop, drop and roll method as the market melts down.
The can simply throw their hands up in the air; retire and hook up the jon boat to go fishing.
And the very last tool they envoke in the negative 10% territory is to go get spine surgery to stiffen it up!
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