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 - An Old-Time Tractor Demonstration - by Kim Pratt. Sam was born in rural Kansas in 1926. His dad was a hard-working farmer and the children worked hard everyday to help ends meet. In the rural area he grew up in, the highlight of the week was Saturday when many people took a break from their work to go to town. It was on one such Saturday in the early 1940's when Sam was 16 years old that he ended up in Dennison, Kansas to watch a demonstration of a new tractor being put on by a local dealer. It was an Allis-Chalmers tractor dealership,
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