Replies to post #20060 on The Friendly Money Making Board

[lakedweller2]

I thought if the Fed lowered the discount rate that this in turn, provided the banks with money at a lower rate. If the banks costs of doing business are lower, than they can in turn pass this on to the ultimate borrower, which could be personal loans, mortgage rates, etc. If a person bought a house with a variable rate, interest only loan, and now the rate jacks up because the Fed raises the discount rate 17 times, and the person can't qualify for a fixed rate loan, doesn't the reverse happen when the Fed drops the discount rate. Isn't it possible that the person that is over extended now qualifies again and can pick up the fixed rate loan. Couple that with the Fed pumping billions of dollars of new money in the banks, now the banks can borrow money that didn't exist at a lower rate and use it for loans, where if all the previous backers of the mortgage have run to the hills...there is new money to make up for the transfer of wealth. And then we have super inflation and the stock market tanks anyway.