Interest rates are cut without thought.

How did we get into our current mess of an economy? Alan Greenspan decided to lower interest rates to a record 1% to allay the 2001 technology crash and effects of 9/11. This allowed a housing bubble, and more broadly a credit bubble, to form. Now that we are seeing the effects of Greenspan's short-term thinking, Ben Bernanke thinks it prudent to lower interest rates - the exact thinking that led us to our current situation. "You cannot solve a problem by using the same thinking you created it with."

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192 Votes | 5 Comments | Comment

Comment by: tigger
322 Days 18 Hrs ago

Is it the actual interest rate or just the dramatic shift in interest rates that causes collapse? Perhaps this time we are already used to lower interest rates and the effect will be less severe.

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Comment by: tbonep
322 Days 10 Hrs ago

Low interest rates are an opportunity. Buying too much is what got us into the mess we are in.

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Comment by: RS
320 Days 11 Hrs ago

I disagree- Feds prune reponsibility is to avert ress and keep Eco growing and low inflation! Greenspan had no choice but to dec rates after two bad events stalled Eco . Berny is trying to do sake except his bulb lit up late and we r geeting into bears market.

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Comment by: puttputt
297 Days 4 Hrs ago

Greenspan raised interested rate in 2001 to 6%. What are you smoking?

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Comment by: Wayne Towers
291 Days 20 Hrs ago

http://money.cnn.com/2003/07/15/news/economy/greenspan/index.htm

The dramatic shift in interest rates did not cause a collapse. It caused a huge credit bubble which had to burst eventually. Lowering interest rates again will not fix this problem.

Interest rates were 5% in 2001 and over the next year or two he lowered them to 1%.

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