Mortgage Rates Will Hit Historical Lows, Thank You Ben Bernanke
Posted on | March 18, 2009 | 2 Comments
On March 18th, 2009, Ben Bernanke and the Federal Reserve Bank announced that they intended to buy up to $300 billion in long term treasuries as well as soak up $750 billion in mortgage backed securities. So, the question one must ask is, “Where is this money going to come from?” Ah, yes, that printing machine known as the Federal Reserve Bank. How many times are we going to go through this. Whenever the government feels that they need to bail out corporations or individuals they just decide to print BILLIONS of dollars. Does anyone else see a problem with this?
Back in November, in the article “President Obama, Please Take Note” I wrote
Find a way to stop Ben Bernanke from printing United States dollars. I am not an economist, nor will I ever claim to be, but the first thing I learned in Economics 205 in college was the law of supply and demand. The greater amount that is provided of a good or service causes that good or service to be demanded less, therefore the price declines. If we continue to print US dollars and going deeper and deeper in debt, it is only logical that the United States dollar will continue to decline.
While the value of the dollar has yet to greatly decrease, it is inevitable that it will happen. Not only will the value of the dollar decrease, we will see HYPERINFLATION as the price of gold, silver and other commodities will skyrocket.
These actions by the Fed are sure to push mortgage rates to the low four percent range. It is also likely that we will see a refi boom as those with a current mortgage rate above 5.5% will save a great deal by refinancing with Bernanke mortgage rates. The ultimate problem with these actions are that this is horrible monetary policy! Keeping mortgage rates historically low will only encourage Americans to buy on credit. Buying on credit is exactly what got us into the mess we are in.
This country needs to learn to stop buying on credit, but how can we when the government encourages us with artificial interest rates? Ultimately, the only way this country will get out of the current economic crisis is to create jobs. Does buying treasuries and mortgage backed securities create jobs? Maybe a few for the people that take the money out of the printing press, but thats about it.
Lower mortgage rates will definitely help people to save on their mortgage payments; I will never argue that. The problem remains that only the financial responsible and well off are going to understand how to refinance at these lower rates. Today, Jim Cramer said that he just got off the phone with a mortgage broker and was able to drop his rate by a point and a quarter. Do you think that Jim Cramer really needs the extra cash? Of course not, but these are the types of people who are going to save on their mortgage; not the individuals who are likely to be foreclosed upon. Those who are struggling financially are in that circumstance for a reason! They are financially illiterate! No matter how much money you put into their pockets, they will find a way to spend it while getting no return.
- Savings, NOT Credit, is the Lifeblood of a Healthy Economy President Obama
- Obama’s Making Home Affordable Program WILL Help You Refinance
- Best Prediction of the Stock Market and Economy – Unemployment Rate
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2 Responses to “Mortgage Rates Will Hit Historical Lows, Thank You Ben Bernanke”
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March 18th, 2009 @ 7:12 pm
Why do you think the FED care if a dollar sinks? Since the FED was created the US dollar lost 90% its value… Does the US government care about hard working savers living below their means? LOL!
March 18th, 2009 @ 10:21 pm
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