Do they really know what they are doing?
During the last week
has rallied to show us that they can “work together” and benevolently hand the common people a few dollars in hopes of stimulating economic activity. We also saw the Federal Reserve cut rates in hopes of swaying the U.S. Economy away from a possible recession. What are the real consequences of these actions taken by our political and financial leaders? Will economic growth be stimulated and move us into prosperous times or will there be unintended consequence that actually move the economy in the opposite direction? The unintentional consequences are what worry me. Dubner and Levitt in a NY Times article discuss unintentional consequences citing three different examples of good intentions causing unintended result. We all know that you don’t get something for nothing and someone will have to repay the Government rebate checks. These rebates are in essence a loan and they will need to be repaid sometime. Will the dollar weaken further and inflation rise because of drastic rate cuts. Some believe that the possible unintended consequences may lead us to repeat the 70’s and 80’s with high inflation followed by high unemployment. We will have to wait and see the consequences, intended and unintentional, as they unfold over time. NY Times Article Washington