They learned through the Carter/Ragan recession what high interest rates in a recession slows spending. Only real way out of a recession is consumer confidence. If they have no faith in a recovery they don't spend money and hence the economy stagnates. If they feel that a deal is too good to pass up (low interest rates apply) they may spend anyway. Or at least that's what they are trying now. It seems to be helping us hold our own. Don't hear about Ford or GM laying off another 20 thousand every few weeks.
How many of us took on debt when the interest rates were 17-18%? Not I. Rates at 2-3.5% makes the idea of taking on more debt seem like a reasonable risk.
So the Fed has been holding down the rates. And when they are only making 2-3% on loans banks are not going to pay much more than 1% on deposits.
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Today's Featured Article - Grain Threshing in the Early 40's - by Jerry D. Coleman. How many of you can sit there and say that you have plowed with a mule? Well I would say not many, but maybe a few. This story is about the day my Grandfather Brown (true name) decided along with my parents to purchase a new Ford tractor. It wasn't really new except to us. The year was about 1967 and my father found a good used Ford 601 tractor to use on the farm instead of "Bob", our old mule. Now my grandfather had had this mule since the mid 40's and he was getting some age on him. S
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