Helicopter BEN Strikes Again!
Once again, the Fed slashed interest rates - now down to 3%. Ouch.
This is BAD news for savers. Watch for interest rates to continue their plummet. I predict that ING will be one of the first to slash rates (as usual).
Where/When will it stop? Let’s take a look at past rates. Here is a link to the Federal Funds rate history going all the way back to the 1950s. I’ve included a chart of just this decade.
As you can see, the low point really hit in Summer 2003 (recession following the dot-com bust and the 9/11 attacks). Low interest rates helped inflate the housing bubble, which assisting in lifting the market out of its slump.
Now that the housing bubble is bursting, we’re rapidly heading down again. Of course, this is an overly-generalized summary, but perhaps we never really left our previous recession - the inflation of the housing bubble merely steered us away for a few years.
Perhaps I’m wrong (I’m no economist, for the record!). Either way, no one can deny that interest rates are dropping quickly. My magic 8-ball says that we have not yet hit bottom. 
Where will it stop? Allow me to make a (hopefully erroneous) prediction - interest rates will hit 1.0% by Summer 2009.
Please let “Chopper” Ben Bernanke prove me wrong. Our last series of extremely low interest rates led to the inflation of another bubble. Let’s hope it doesn’t happen again.
What’s your prediction for interest rates? Do you have a magic 8-ball, too? Is it better than mine?
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