Bernanke to Cut Rates Again: SOMEBODY STOP THIS MAN!

According to an article by the BBC, certifiableed financial genius and Chairman of the Federal Reserve Ben Bernanke has stated that he may cut interest rates *again*:

In his semi-annual report to the US Congress, Mr Bernanke said the Fed would continue to “act in a timely manner as needed to support growth”.

Analysts said his comments increased the likelihood of another rate cut at the Fed’s next meeting on 18 March.

Are you kidding me?

Okay, it seems counterintuitive for any rational American to be upset about interests rates being cut, I mean, it’s going to prevent a recession, right?

WRONG!

Here’s what happens when the fed cuts rates: mortgage, loan, and credit APRs decrease by fractions of a percent, which the Fed hopes will spur people taking out newer, bigger loans at the lower APR to pay off those old, high ones, also known as refinancing (re-fi). When people re-fi, banks can try and sell more money than they need to them, so that the borrowers can spend the extra cash while paying the same amount on their home or credit card (with credit cards, it’s called a balance transfer onto a newly opened account. Car loans are immune to this sort of re-fi). Even if you just take the exact amount to pay off the high interest balance and end up with lower monthly payments overall, this will free up your wallet for extra spending and spur the economy.

Now, here’s the problem: It Doesn’t Work Like That.

What will happen is that your credit card rate will decease by a fraction of a percent. If you are in such dire straights that you need to refi to free up cash to pay on that soon-to-be-repo’d house, sorry, but your credit probably sucks so much right now that no one’s going to lend to you anyway. So you fail, or more accurately, the Fed fails you.

And then there are those of us who have high-yield savings accounts and little to no debt. All this is doing is decreasing your savings because that tiny fraction of a percent you’re saving on my credit cards (assuming that you don’t pay your cards in full every month like I do) isn’t going to make up for the half a percent (or more) hit your bank account interest rate (you know, what they pay *you*) will take, so if you’re are responsible borrower, you lose too! The Fed fails again!

The only people who will benefit are those Middle Class Jerks who live beyond their means, who bounce from 0% card to 0% card with their massive balances from vacations to wherever the $160k-$80k/year people go, who’ll refi their homes to make repairs, who’ll buy repo’d homes and cars and flip them in a few years, who have no savings or retirement accounts because Social Security will take care of things, who vote Republicican….

…I’ve said too much, haven’t I?