The past few months in the United States

The past few months in the United States - Flynn 1 Don...

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Flynn 1 Don Flynn WRC 1023.081 Professor Bradley March 5, 2008 To Cut Interest Rates or Not? The past few months in the United States, the economy has been extremely volatile and unstable. Americans are unsure about where the economy is headed, and whether or not it is in a recession. The Dow Jones Industrial Average and S&P 500 index which are important indicators that help tell how the financial markets are doing, are down 15 percent over just the past five months (Dow Jones). Now that the economy is in trouble, many economists have been arguing how it should be fixed. It ultimately comes down to the Federal Reserve and whether or not they should raise, or lower the interest rates. Based on history, and interpretation of economic models, the Federal Reserve needs to continue to lower the interest rates. This period of economic decline that Americans are experiencing, started with the slowing of the housing market, which has caused home prices to slump. Also, adjustable rate mortgages, which are a type of mortgage account that homeowners may take from the bank to purchase their home, are resetting; and the new rate of interest will have a higher yield, which many people cannot afford, and many homeowners are being foreclosed on. This is the result of shady lenders who approved customers to take a loan, that did not have high enough incomes to borrow the money, or that had bad credit. This is known as sub-prime lending, and this credit crunch is the cause of economic decline that the United States economy has suffered for the past several months. The choice to raise or lower the interest rates is left up to the Federal Reserve Chairman, Ben Bernanke, and a committee known as the Federal Open Market Committee, which is the monetary policymaking body of the Federal Reserve. At the next meeting, on March 18 th the
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The past few months in the United States - Flynn 1 Don...

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