The Federal Reserve, who is responsible for regulating base interest rates and somewhat for also regulating the prime interest rate, which is what we talk about sometims, is getting ready to launch a new program whereby (I’ll skip how they intend to get this done as I don’t understand it and I think you’d need a degree in economics and finance to understand anyways) they are going to enable banks to extend loans and credit card lines to consumers, both of which are suffering and dramatically tighter these days, and hence the reason for much of the spending freeze we see by modern day consumers today.
This new program, combined with the recently released statement by the Fed that it does not intend to increase the interest rate of nearly 0% it instituted citing the weakening economy as a reason, any time soon, and they are hoping that this combined with the new program to help loosen up the consumer credit market will enable people to start spending more money. This will help business be profitable again, which should in turn help to turn around the dismal job market and all the layoffs we keep on hearing about. It will still take a lot of time, this is just the beginning of a bad spell, as we’ve been warned so very many times now.
The Fed has only stated that this program is slated to begin some time in February, so that’s a good thing, we’re already most likely in the midst of it’s final planning and implementation stages. Hopefully they really know what they’re doing and this move will be a big injection into the economy of what we need most right now, which is easier credit. People will begin to spend more freely, although many have gotten so in a routine of fear and saving every last penny that may be a difficult cycle to break.
Speaking from an economic growth standpoint, this is never a good thing, however, the lesson that many Americans have learned is that money doesn’t grow on trees, as your parents used to tell you, and that the days of easy credit and getting in over your head may well be over, inciting a furthering toward an environment where Americans are more spend thrifty, save more, and hopefully don’t bite off more than they can chew so to speak.