Leave your feedback Share Copy URL https://www.pbs.org/newshour/economy/where-is-the-fed-rate-cut-felt Email Facebook Twitter LinkedIn Pinterest Tumblr Share on Facebook Share on Twitter Where is the Fed rate cut felt in the economy? Economy Feb 11, 2008 10:27 AM EDT Question/Comment: A Fed rate cut presumably has a cost; where is that felt? Paul Solman: Encouraging folks who made bad decisions before – invested stupidly, say, in mortgage-backed securities – to invest stupidly again, since the Fed will bail them out. Eventually, the cost is felt in inflation. When the Fed cuts, it is putting more money into the economy. More money, given the same amount of goods and services, means the money is worth less. That’s inflation. We're not going anywhere. Stand up for truly independent, trusted news that you can count on! Donate now
Question/Comment: A Fed rate cut presumably has a cost; where is that felt? Paul Solman: Encouraging folks who made bad decisions before – invested stupidly, say, in mortgage-backed securities – to invest stupidly again, since the Fed will bail them out. Eventually, the cost is felt in inflation. When the Fed cuts, it is putting more money into the economy. More money, given the same amount of goods and services, means the money is worth less. That’s inflation. We're not going anywhere. Stand up for truly independent, trusted news that you can count on! Donate now