Lowering of interest rates is likeputting a BandAid on a gunshot wound. Sure investors get some quick gains. Yes,loans are cheaper. But all of this also means more money to the money supply.Sounds good? It’s not. Take a look at “Money As Debt”,this documentary goes deep into the process of how more money iscreated out of thin air every single time we take out a loan. As moremoney floods the market, USD is decreased and price level rises.

In otherwords, a deflating dollar and continuous inflation. With such occurrences, whatelse do we expect to happen when we visit the gas station and see $4 pergallon?Yes, demand plays a significant part in the price level of crude oil andnatural gas, but inflation is the main front runner of the success of oilstocks lately. You can even consider as to why oil is rising, but gold isfalling.HereÂ’s something else that I feel strongly about. While we are experiencingtough times, a bear market, and all of these other struggles due to inflation(and deflation in some matters), I feel that this is going to last even morelong-term than some would like to think. LetÂ’s hypothetically imagine everyonebowing on their knees and praising Ben Bernanke & George Bush for theirremarkable efforts on rebuilding the economy thanks to seriously deflation ofinterest rates.

Well, do you think those rates are going to stay that wayforever? One day, I donÂ’t know when but I will guess and say when everythinglooks to be subsiding, interest rates will rise again. It willnot stay at 2% forever. And as the Feds begin to rise from 2% to 2.25% to 2.5%and on and on, investors will not be happy. Businesses will not be happy. Bankswill not be happy. And in turn, the people will not be happy. Investors willtake out money from the market causing stocks and businesses will suffer fromthis withdrawal. Banks will not be able to profit as much causing higher loanswhich will affect the people looking to purchase homes, cars, and otherinvestments.

I feel once this bear market is over, weÂ’ll have a nice short bullmarket, and then another bear market will follow. And I feel it may happen onceBernankeÂ’s term ends and another unfortunate soul has to take his place andattempts to correct the wrong that is being done.Back in the 1930Â’s, Theodore Roosevelt felt it was best to involve thegovernment in the management of our economy and with a series of programs hesuccessfully brought the American people out of the Great Depression.Lately, it seems as if the government is slowly edging us back to the sameposition we were in back in the 1930s. Now IÂ’m not a conspiracy theorist andsaying the world is coming to an end, but here is one fact that I do know andeveryone can relate to. Before the stimulus package was proposed and when theFederal Reserve was lowering interest rates in an attempt to help the Americanpeople and businesses.

President Bush, in a press conference, apparently hadabsolutely no idea on the state of our economy in relation to the oilcommodity. I donÂ’t know about you, but IÂ’m glad his term is about to end,because I do not want a President running a country who is completelyclueless on the state of an economy he is supposedly involved in.So that begs Jingjin China Barrels and Screw Factory the question. Should the government limit itsinvolvement in the management of our economy Or should it expand theirinvolvement. Honestly, IÂ’m tied between the two. I feel they shouldexpand and gain more control of the Federal Reserve. As IÂ’ve said as aninvestor, I like the cutting of interest rates because of the gains, but as aneconomist I despise it because of the consequences that come with it. And Iwould rather deter the consequences over gaining an extra few bucks. I know thegovernment canÂ’t interfere with the business of the Federal Reserve, butsomething needs to be done because it is the American people that are sufferingsuch affects.

At the same time, I feel that the government should limit itsinvolvement, because honestly, I donÂ’t know what more can be done. When thegovernment first got involved back in the 1930s, they opened up moregovernmental jobs, created welfare, and did all they could to help the peopleand in turn help the economy. That is what this stimulus package is supposed todo. What new programs can be made? What new routes can be taken?Okay, I had a lot to get off of my chest on that. I re-read my essay, then Iread David GrossÂ’s article and it just brought up a LOT of questions andopinions in my head. Now please remember, these are my own opinions andinsights. If it happens, then I want for everyone to treat me as every othereconomist out there that make obvious predications but are still somehowpraised by the media. If it doesnÂ’t happen, then the best I can say is at leastI provided some facts to support my opinion. ThatÂ’s more than I can say forsome of these people making their assumptions.

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