Fed Cuts Rates To Steady Housing Market

One of the hardest jobs in the United States is held by the Chairman of the Federal Reserve Board. Why is his job so hard? - Because the health of everyone else's job, retirement account and home value are effected by his decision on whether to raise or lower interest rates as U.S economic conditions change. Yesterday, in the face of increasing foreclosures in the sub-prime lending market the Federal Reserve lowered interest rates by 1/2 a percent. That move will free up additional revenue to help banks across the country borrow money from the government and loan it out to credit worthy businesses and individuals.

The free enterprise system in the United States has always been prone to a "boom/bust" mentality. When times are good and money is flowing freely we Americans always over-do-it and then we must be forced back to reality. The Federal Reserve Board was created to help speed up the economy when it begins to grind toward recession and slow it down when craziness like offering home loans to people with bad credit and no way to repay the loan start being made everyday. While this roller coaster ride of an econcomy we have here in the United States causes most average people to get sea sick, the few people that understand the boom and bust cycles in the U.S. economy become rich while millions of others suffer and wonder what happened to their wonderful life.

There is a third problem the Federal Reserve must worry about and that problem is something called "Stagnation". For the U.S. economy to remain strong there must be growth from one year to the next. While most people are familiar with the roller coaster ride of boom and bust, less know about another problem the Federal Reserve must concern themselves with and that is Stagnation. An economy that isn't moving up or down over a long period of time is call a stagnant economy and this can be more damaging to the overall U.S. economy than the normal boom and bust problem. When the U.S. economy stops moving all together, it is the job of the Federal Reserve to act like "jumper cables" and slowly edge the U.S. economy back into growth mode.

Like I said when I started, the job of Federal Reserve Chairman is a hard job to get right because everything this person does has more long term effects on the economy than short term. So if mistakes are made it will take years for them to be fully realized and at that point the lives of millions of people around the world are already effected and correcting the damages will take additional years of suffering by average Americans.

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