Marketplace: Bernanke loves me, he loves me not

Friday, September 21, 2007

Bernanke loves me, he loves me not

The Fed and it's Chairman Ben Bernanke showed Wall Street some love by cutting the key federal funds rate by a half a percentage point. Tess Vigeland talks with Peter Morici about what the rate cut may mean to the average consumer.

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Federal Reserve Chairman Ben Bernanke testifies during the House Financial Services Committee hearing on Capitol Hill. (Mark Wilson/Getty Images)

More on The Economy, Investing, Housing - Real Estate, Wall Street

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Marketplace Confessional

I am not buying the whole "there might not even be a recession, and if there is one, it will be brief." If oil prices continue to rise, driving inflation, the Federal Reserve will eventually be forced to raise interest rates in the middle of a slowdown. We are already seeing signs of a Japan style "liquidity trap" which is preventing the free flow of money from the banks to Main Street. I think the government's efforts to bail out the housing market will be about as effective as the response to Hurricane Katrina...

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