The fed raises interest rates to cut business investment which in theory slows an overheated economy. The housing boom had longterm interest rates actually lower than prime short term rates. Bernanke’s predisessors did this to stimulate housing knowing that it would not raise the “Official National Inflation Numbers”. And that housing expansion could fuel an economy devistated by 911. And it worked for years, but sooner or later the piper must be paid, and todays housing slump is the price.
The fed raises interest rates to cut business investment which in theory slows an overheated economy. The housing boom had longterm interest rates actually lower than prime short term rates. Bernanke’s predisessors did this to stimulate housing knowing that it would not raise the “Official National Inflation Numbers”. And that housing expansion could fuel an economy devistated by 911. And it worked for years, but sooner or later the piper must be paid, and todays housing slump is the price.
