PLEASE, NO MORE RATE CUTS...

Everyone is worried about how much it costs to fill their gas tank and put food on the table and that times are tough and they are only going to get worse. I have no vast degree in this stuff, but I read a lot about it, and it seems to me that the thing the Fed is doing to prevent a recession will be the exact thing that pushes us into one.

First, let's start with gas prices. They are high, no doubt about it. But did you realize that they are high, not because we don't have enough oil or gasoline (in fact we are well supplied on both fronts), but it is because our dollar is incredibly weak. One US dollar is equivalent to a Canadian dollar. When the dollar is weak, oil prices go up. Why is our dollar so weak? Because the Feds keep cutting the rate.

This brings me to my next point. The price of everything else is going up. Partially due to our weak dollar (which means it costs more to buy goods from other countries) and partially due to the high oil and gas prices explained earlier.

So, we're getting these stimulus checks to help "boost" the economy. They aren't going to work for several reasons. Many people have already decided to put it into savings, pay off debt, or catch up on bills. Since it costs so much to purchase gas and many other products, it would be frivolous to go out and spend it on a new TV, unless the high costs of everything hasn't made you feel the pinch yet. Had the checks come 3-6 months ago, then perhaps people would have spent them more freely.

We're basically in a sad circle. The Feds lower rates to help keep us out of a recession. What that does is raises costs on everyday products, but lowers what it costs to borrow money for houses, cars, and credit cards. So, we have to ask ourselves, is it worth it? If the rate were to stay the same and start moving up even, we may start to see things stabilize and in fact go down in price. Believe it or not, as I write this, oil prices have dropped $10 a barrel in about 3 days time, mostly because the dollar's value and oil prices already factored in the rate cut the Feds made yesterday and because we are well supplied on oil. If we drop the rate again unexpectedly like we have sometimes in the last few months, you can expect it to go right back up to where it was.

Will we see $4 a gallon for gas??? In fact some people already have, and those that haven't might see it for a short time. But I think if we stay on this course, leave the rates alone, raise them towards the end of the year a bit, we'll see prices go back around $3 a gallon, and the price for everything else will stabilize around the same time.

Where is my compressed air car when I need it???