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Technology Stocks : Cisco Systems, Inc. - Off-topic postings
CSCO 71.08+0.1%Nov 7 9:30 AM EST
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To: RetiredNow who wrote (33)11/30/2007 4:36:29 AM
From: JDN  Read Replies (1) of 230
 
Well, we have had an "inverted" yield curve for a very long time now. Lately it seems to have really gotten out of hand. I believe the treasury bill rate is something like 3% and the Federal Funds rate 4 1/2%. Big banks borrow through the Fed and lend out, thats how the money supply is expanded. When you have a situation like above it restricts credit, not just for homes but for BUSINESSES. So, if credit is restricted you can expect a lot of dire effects far beyond the housing industry. As to the value of the $$ I am not sure the federal funds rate has a lot to do with that unless you mean restrict the money supply. But, as I pointed out above, that could cause a major reduction in business activity, higher unemployment and possibly a recession. I have always been of the opinion, rightly or wrongly, that the $$'s value is more attributable to a healthy economy and a balanced budget. We've had a really healthy economy till now but our budget got out of whack. Best way to have a chance to get it back into balance IMHO is GROW BUSINESS ACTIVITY resulting in growing tax revenues. To merely raise taxes, especially in this upcoming potential environment IMHO will result in REDUCING tax revenue and INCREASING budget deficits. jdn
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