I was reading THIS ARTICLE this morning about how there’s an expected rate cut of a 1/4% by the Fed soon. Since the Fed Fund rate (the rate which banks borrow money) is currently 1.25%, this will drop it to 1%, meaning that banks (which typically add 2%) will be loaning at 3%, which is below the 3.33% inflation rate. This means that if you’re holding cash, you’re pretty much screwing yourself on free money, since inflation is higher than the loan rate. This is quite weird… To make money you DON’T stick it in the bank, you simply borrow it. We’re probably never going to see this type of situation ever again where Uncle Sam is paying you to borrow money! Talk about an interesting way to force people to push money back into the flow…

Press more for my local cache of the article…
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