When retail sales crash, followed by CEOs laying workers off by the thousands, what will the Fed do then?

Question

Investors are already buying foreign currency. The little guys seem to be the ones who are oblivious to the obvious.

B.Kevorkian (below) I really do like your optimism and hope you are correct. Although I am certain that what goes up, must come down.

The only variable to rescue this economy would be a drastic drop in energy costs.

CHARITY G (below) Agreed. Bad but not fatal. Some, in previous posts, try to say there is absolutely nothing wrong and nothing will ever happen.

Answer 1

If it looks as though the rate of growth in the money supply is slowing, then the Fed will lower interest rates. The big misperception about the Fed is that its job is to stimulate the economy--it is impartial to that, and with good reason. The Fed's job is to keep inflation in check--nothing more, and nothing less. It does this by regulating the rate of growth in the money supply using two tools: Interest rates and open market activities. When the Fed gets involved in trying to regulate the economy, it is going outside of it's scope and the result could be inflation or deflation of the currency. This is what happened in the 1970s--the Fed was trying to stimulate the economy by keeping interest rates low and as a result, the money supply grew too fast and inflation resulted. Since then, markets have depended on the Fed to keep inflation in check. If there were signs that the Fed was going outside of this mandate again, markets would react negatively.

Answer 2

The Fed can do nothing in that case. That is the trouble with the Idea that Taxes cut are good and what is good for big bussiness is good for the county. The truth is that spend runs the county. What runs the economy is spend the joe blows and john doe of the county that live pay check to pay check. They run the economy. It is the thing that they buy that create the need for more works to biuld more stuff and that in turn creates more wealth, by making more jobs. FDR almost had us out of the depression by the start of WW2 using this Idea. Jobs adn spending make wealth. Sadly this seems to be lost on the rich.

Answer 3

If retail sales crash the layoffs will come in China, which may prompt their government to attempt to further depress the Yaun from it's already unrealistically low level compared to the Dollar. Corporate proffits at retailers will certainly take a hit, and some of thier permanent employees may indeed get cut, and you might even see some store closures. However, given the state of modern inventory control, it might not hit them /that/ badly, they might just manage to anticipate the drop, order less, and not hire so much holiday temporary help.

Answer 4

Not all of the little guys. It doesn't take a rocket scientist to figure out we are in trouble with the huge trade deficit that there currently is.

The fed WANTS this to happen so the creation of the North American Union will be easier to do. They WANT the dollar to plunge.

Answer 5

The same as he has always done, as he is master and Emperor of all the Americas and of Iraq: Nothing or he will take the necessary steps to make it worse.

Answer 6

Recession. As long as we avoid positive savings it will be bad but not fatal.

Answer 7

They are building the concentration camps as you speak.....

Answer 8

same thing they do now spy on em and steel from em

Answer 9

Dunno. But it is interesting that your crystal ball tells you "when."