We need $3 billion a day in foreign investment to keep this economy afloat. China holds over $1.5 trillion in US T-bills and is threatening to sell them; nix that, IS selling them. BTW, the Arabs are selling them too--what do you think the $7 billion investment in Citi was all about?
To insure that sovereigns keep buying our paper we need to get the yield up on the 2 and 10 year notes ASAP, and you sure as hell don't do that by cutting interest rates, do you professor?
A) Cutting rates causes people to pull money out of bonds and buy stocks. B) This drives down yields even more. C) This causes foreigners to bail from the US T-bills and sell dollars. D) End result: No foreign money. No US economy.
I guarantee you the same people who are clamoring for interest rate cuts now will develop selective amnesia about 12-18 months from now when the true cost starts hitting them at the checkstand. The news channels will be running stories like "$200 FOR ONE BAG OF GROCERCIES!" and "COST OF LIVING SKYROCKETS!" The alphabet channels will bring on lots of talking heads to analyze what caused the crisis, why the Fed was so irresponsible, etc. They'll shout and whine at the camera "How could this have happened? How? I'll tell you how. It's because we're printing money like the Weimar Republic, that's how. What did you think was going to happen? You stupid jackasses (that means you Kudlow).