Repeating the old mistakes
As if it were their plain intention to destroy the American economy, the US central bankers lowered the key interest rate in an aggressive move by half a percentag point. That was more than the markets had asked for.
The reduction of the interest rate will temporarily stabilize the financial markets, but the forces that have brought about the crisis in the first place will not go away.
Even more so: with its rate cut, the US central bank has gushed more oil into a fire that was already burning - the fire of inflation.
With the rate cut, the US dollar will resume its downward track and import prices, too, will rise.
With a productivity rate that has fallen to its lowest level since over ten years ago, the higher demand that comes with more money, will make prices go up.
For a short period of time, Bernanke will have pleased the stock market. In the long run, one more step has been taken to wreck the American economy.
The Fed has made a tragic move.
Antony Mueller