A perfect storm
Dear Editor:Well, America is about to enter into a perfect economic storm.When you consider the cost of the Iraq war, the hurricanes, the military expenditures, we are faced with unprecedented deficits, and this will have a tremendous ripple effect throughout the economy. Piled on top of this are the extremely high prices for heating fuel and gasoline. This alone has ripped out a large percentage of discretionary income for most Americans. Now on top of that the Federal Reserve Board is constantly raising interest rates, which results in higher credit card payments and loan payments for individuals. For corporations it’s a potential disaster. With billions of dollars of debt, a slight increase in interest rates will wipe out their bottom line. This will cause them to want to make drastic changes in their companies, which usually results in a significant layoff of hardworking employees. As all these forces come together, they create the perfect economic storm that represents a major disaster for the American economy. Much of this could be averted by the Federal Reserve Board. Fuel prices are controlled by foreigners. Disasters are controlled by a power higher than all of us, and the Iraq war is a task that can not be abandoned no matter how much we all hate it. As the Federal Reserve Board raises interest rates, most credit card companies have increased the minimum monthly payment. What the Federal Reserve Board is doing is punishing the American public by creating job losses, sucking up their discretionary cash into the banking industry, which will cause bankruptcies – personal and business. To add to the bankruptcy issue, the laws have been changed now so that the lenders in a bankruptcy are no longer going to take a hit. People are going to have to pay them back sooner or later, again, benefiting the banking industry and credit card companies. The benefits of this perfect storm for the banking industry, of course, is understandable when you realize that the Federal Reserve Board of governors is mostly bankers. A few economists have worked or will work for banks. The outgoing chairman, Alan Greenspan, constantly talked about inflation, and it never happened. But that’s the only way he could scare the public into believing that benefiting bankers is in their interest. An example is that last month inflation was at a record high and received a great deal of publicity, but what didn’t receive publicity was one-tenth of 1 percent was core inflation. Core inflation excludes fuel cost, which Americans have no control over, and food, which is subject to the whims of the weather, again out of control of the public. What the public does control is core inflation and it has behaved quite well, yet the Federal Reserve Board is determined to punish the public for behaving well. That reminds me of that old expression “no good deed goes unpunished.”The public should rise up against the Federal Reserve Board and demand that they stop raising rates and, more importantly, lower rates when we’re on the verge of this economic storm. I would call it a category 10 storm, and the eye is coming ashore. Will the new Fed chairman help us?Richard C. GoodwinSnowmass Village
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