Our Robust Economy III

I wondered at the time why the Fed cut the rate by 1/2% and not the 1/4% as most economists had forecast. It seemed a little excessive, almost a panic move. Wall Street, of course, responded with it's usual zeal to the cut and went on another speculative tear, pounding out 300 and 200 point gains like all was right with the world again but, these new durable goods numbers make it look like the Fed knew something deep and overarching was at play in the economy and that money supply was tightening beyond their control.

Interest rate cuts may temporarily assist the large institutions as they scramble to reparcel their portfolios but it will take months for that effect to ripple through to the end user i.e. the ubiquitous american families who over-extended themselves in a frantic quest for the american dream.

The way this economy is being managed exposes the fragility this Fed is well aware of, they may cut interest rates again, they may get to a point where it won't help.