Will lower interest rates help the economy?

The reduction in interest rates will improve the economy. There are fundamental issues that are still cause for concern having to do with too many people carrying too much debt. Many have emptied their savings accounts and depleted their home equity to the point that they are not a good credit risk and are not able to borrow money regardless of what the interest rate is.

Reduced interest rates will stop panic selling and make it easier for people to cover their mortgage payments. They should also depress the value of the US dollar making it more expensive to import consumer goods. It may also force the US to do more to balance its budget because lower interest rates will make it more difficult for the government to borrow money to finance its fiscally irresponsible commitments to future entitlements and tax cuts for the wealthy. This measure should be combined with increased regulation of bank lending especially with respect to mortgages. Once the panic is averted interest rates should rise and ideally mortgage interest deductibility will be done away with so people will not be so willing to borrow money against their homes.

Interest rate cuts will mostly help the Chinese with their economy as in people here will be borrowing money for buying stuff made there. What I think would stimulate our ecomony would be to dust off a Ronald Regan initiative of capital investment credits against income taxes. That would spur business investment that would create employment here and thus OUR economy.

Reduced rates are a temporary fix. Impact or success for the Nation will not have a long term sustaining economical momentum/inertia.
A band aid fix at best for a wound that requires stitches will let the Nation to eventually bleed to Death in the end.

Herbert Hoover tried “Trickle Down” economics, apparently believing human nature of the elites was better than our founding fathers had guessed. The announcement of Garn-St. Germain (Savings & Loans) passing set off alarm bells the instant I heard it on the radio, and reminded me that good intentions without adequate checks and balances don’t cut it. It would seem you could change a few words, here and there, and find the same type of unrealistic faith in the seed point for generating recovery. I’m not against it, but be aware it invites untold numbers incompetent and fraudulent investors. If managed as incompetently as our national debt (far too little control on spending to match tax cuts), it will only make the situation worse in the long run. I find it rather humorous that President Bush’s October speech in Rogers, Arkansas, on Fiscal Responsibility didn’t fit well with the National debt I checked soon after ($9,055,825,036,051), and is $149,274,769,396 lower than the debt added since October 17 and today (less than 1/2% different from the $150 billion proposed relief).
An even smaller percentage of difference, that would surprise many, is the increase in active duty military personnel from 30 June, 2000 to 30 June, 2007. Win some bets with your friends on this one! Tell them we had 1,372,900 active duty military personnel on 30 June,2000, hold up five fingers and tell them the choices are that we added; 500,000, 50,000, 5,000, 500, 50, or 5. No one has yet guessed we had 1.372,905 active duty military personnel on 30 June, 2007, no matter how many guesses I let them have (and showed them the answer by holding up five fingers). Talk is cheap, look at what actually happens, especially when they try slight variations of the same things that have come up short so many times before.

If they keep lowering interest rates the dollar will become worthless. It has already dropped to half of its value in 5 years (1.2 Euros = $1 in 2002 to $1.5 = 1 Euro in 2007), and it did not increase exports except in select areas. It only made our debt larger by having Americans pay more for imported goods. How can we pay our debt with a dollar that is worthless. Who will want to invest in America. This will only reduce America’s standing in the world, and will lower overall world marekt confidence.

Yes, in the short run, the economy will improve. The bigger issue is the dollars value in the global economy. The changing of the interest rate stimulates consumer purchase (in theory), but an increas in consumer purchases has no real value, long term effect on our economy. We need infrastructure improvements, development and research investments, and hard product increases to improve our dollar in the world market.

NO, more bogus governmental tampering. Let the market place demands set the cost of money. Our government thinks they can spend their way to prosperity by lowering the cost of borrowed money so the people and the govt can spend more. Meanwhile the individual conservative money saving US citizen sees his lifes savings evaporate, receiving not even enough interest to keep up with the inflationary goverment sponsered printing and dumping of cheap dollars into the faltering economy.