BiggerPockets Daily How Long Will It Take For the Fed to Act?
Apr 11, 2025
The discussion dives into when the Federal Reserve steps in during economic crises. Historical examples, from the Long-Term Capital collapse to the pandemic, provide context for today’s tightening financial conditions. The challenges of inflation and resilient job markets are examined, alongside lessons from past crises like the dot-com bubble. Interestingly, the potential effects of AI failures and the Fed's balancing act in a rapidly changing economy highlight the complexity of their interventions.
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The Fed's Dilemma
- The Federal Reserve faces a dilemma due to current market conditions.
- Raising rates hurts businesses, while lowering rates fuels inflation.
1998 Crisis
- The 1998 Long-Term Capital Management crisis nearly caused a financial collapse.
- The Fed intervened with a bailout and rate cuts to stabilize the situation.
Dot-com Crash and 9/11
- Following the dot-com crash and 9/11, the Fed cut interest rates.
- Emergency borrowing spiked as the financial system faced uncertainty.