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Fed activity

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posted on Aug, 11 2005 @ 07:09 PM
Greenspan and the Fed again have decided it would be best to raise short term interest rates. Though many economics maintain that the economy is strong, a slight raise of one quarter of a percent was inacted. Speculation is another rise in the rates in Sept.

With crude oil prices soaring to $66 per barrel is it necessary for the Fed to do such a thing? No, I don't think there is any cause for concern as I don't think anyone will be needing to take out loans to buy gasoline or pay their heat bills or electric bills.

posted on Aug, 11 2005 @ 08:09 PM
Rising oil prices affect every sector of the economy.
The entire global market economy depends on moving those goods around the globe.
Cheap imports from overseas? . . . takes oil burning freighters to get here.
Getting them from port to your town/city takes oil burning trucks and locamotives.
Moving people around in oversized gas guzzling SUVs takes plenty of oil.

The demand for oil in China is growing faster than even ours is.

Rising energy prices have very long fingers that reach deeply and broadly into the economy.
Inflation, short of economic collapse, is inevitable.

The only way that people won't just borrow more money [essentially create money and with it inflation] to pay for it is to make interest rates high enough to restrain this.

Raising interest rates helps to protect the value of the dollars you may have or make.
Irresponsible government on the other hand causes a currency to be devalued.

Hard to say which of those factors will have more effect on USDs.

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