Federal Reserve

Let's look at some of the potential reasons and personal benefits for the Federal Reserve to have cut rates by 50 basis points yesterday.

A perusal around the web and even mainstream economic outlets described the Fed as being between a rock and hard place. Article after article talked of how inflation pressures remained while a crashing housing industry was in need of assistance. Almost every article mentioned how desperately Wall Street was looking for a rate cut.

Many mainstream and independent economic journalist are using words like mini-crash and crisis when describing the action of the market over the last three weeks. They rightly point out how some of the hourly rises and falls have been breath taking.

Watch and learn:

Editor's note: The following is the last email in an exchange between myself and a reader on what the Fed will do at today's FOMC meeting. Leslie writes:

Michael,

I think Bernanke leaves interest rates alone and continues with the theme of remaining vigilant about inflation. And I think they follow through with the theme of not bailing out lenders who made loans they knew couldn't be repaid. He and other Fed members have stated many times, and very clearly that this is their position. His and Paulson's comments that 'readjustments in pricing risk are necessary' are the jawboning part. Their actions will show they're serious about it.