Time for a Rate Cut

Oct 17, 2023 | Finconomics 101, No Bull Economics

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Everyone is focused on the Fed Fund Rate which does not seem so bad at 5.33% when viewed in the context of historical data. However, in the real world, consumers are forced to borrow at much higher rates as indicated in the following chart. From the perspective of John & Jane Q. Public, it’s way past time for a rate cut – it’s the moral thing to do…    

Commentary

  • The Bible teaches a principle that applies to consumer lending from Exodus 22:25: If thou lend money to any of my people that is poor by thee, thou shalt not be to him as an usurer, neither shalt thou lay upon him usury.
  • While we are not advocating that for-profit banks lend for free, there is a principle here that society must embrace – those with means (capital) should be considerate of the plights faced by those who need their help.
  • While a +5% hike in the Fed Fund rate may not be especially onerous on money center banks, it translates into a 5% hike in interest rates charged for mortgages, car loans & credit card borrowings.
  • A 5% hike on consumer loans, through no fault of those seeking help with their living expenses, represents a nearly impossible burden on hard-working Americans that can be simply alleviated with a Fed rate cut. It’s the right thing to do!     
Mortgage Rate, Finance Rate, Commercial Bank Interest Rate Graph

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