Fed members worried about deep recession

[Pale Blue Dot]

Source: MSNBC

Notes from March meeting show some concerned about major downturn

Worries about a deep recession — not a shallow one — drove Fed policymakers to again slash a key interest rate last month, according to minutes of their closed-door meeting.

Even as the Fed battled in almost unprecedented fashion to stem a widening credit and housing slump, some Fed members fretted over the possibility of a “prolonged and severe” business downturn. It was in that environment that they voted — with two dissents — to cut this important interest rate by three-quarters of a percentage point, to 2.25 percent. That action capped the most aggressive Fed intervention in a quarter-century.

Some Fed policymakers thought that such a widening recession could not be ruled out given the further restriction of credit availability and “ongoing weakness in the housing market,” according to the meeting minutes that were made public Tuesday.

Two Fed’s members — Charles Plosser, president of the Federal Reserve Bank of Philadelphia, and Richard Fisher, president of the Federal Reserve Bank of Dallas — opposed such a big rate reduction, however. They favored a smaller cut because of concerns about a potential inflation flare-up. It was a crack in the mostly unified front that the fed often has projected to the public.



Read more: http://www.msnbc.msn.com/id/24015213/

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Somebody's waking up.

[magellan]

1. Crap. If they're entertaining the possibility

...of a “prolonged and severe” business downturn, it's a sure thing.

[Demeter]

2. Cutting the Interest Rates Below Inflation Will Guarantee a Prolonged

period of hyperinflation and recession, simultaneously.

[greyghost]

5. You beat me too it. That's EXACTLY what's coming.

[NewJeffCT]

3. well, no shit...

they've kept interest rates artificially low for over six years now just to keep the economy above water.

The result could be a prolonged period of high inflation & high interest rates similar to what we had from the early to mid 70s to the early 80s.

[SpiralHawk]

4. "Just more fact-based crapola. We are doing fabulously. Smirk." - Commander AWOL

[ckramer]

6. Looks like the stock market disagreed

It's up up up

I suggest everyone take their 401k money out to cash as soon as possible.

Don't wait til the crash!

[truedelphi]

7. Our retirement funds got used for medical expenses

Which was really pissing me off. But now it looks like at least we will have the satisfaction of knowing that we spent it on keeping Mark alive. Whereas if the economy totally tanks, no one will ahae gotten much use out of their pension funds at all.
America - Ya gotta love her.