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A recent article from Reuters states that “the U.S. Federal Reserve is expected to slash interest rates by as much as a whole percentage point at its policy meeting on Tuesday.” Currently this rate is at 3% and the cut would lower it down to 2%. This is yet another bold move by the federal reserve in an attempt to prevent a recession in the U.S. economy. Since September, “the Fed has cut overnight rates by 2.25 percentage points.”

If Bernanke goes ahead with this 1% cut that is rumored, he is not giving himself a whole lot of wiggle room for later. Once the rate is down to zero, he can’t exactly go into the negative numbers. If I were him I would have taken a more gradual step-down approach instead of these large cuts. Personally I believe that large cuts and hikes tend to scare the markets. People like to be able to predict the future. Remember when Greenspan had his usual .25% hike every meeting? The markets loved that. They knew exactly what was going to happen each time there was a meeting. There were not a whole lot of surprises. It seems like now every time there is a Fed meeting there is a large speculation over what is going to happen. I don’t think that this is a good thing for the health of the market.

This photo was obtained from the following site

Consumers can feel the effects of Bernanke’s cuts though. I had a money market account with VirtualBank that was paying 4.65% no more than 6 months ago. Now it is paying only 3%. CD rates at the credit union that I work at have dropped steadily as well. If I remember, a CD was about 5.05% only about five months ago. Now I believe it is paying 3.65%. Every day I hear grumblings from the CD savers who rely on CD rates as a main source of their income. Many complain that if rates continue to drop they will not have the interest income that they need to sustain their lifestyle.

If this cut were to be 1% as predicted, it would be the “biggest rate cut since 1982.” If anyone remembers correctly, 1982 was a time of rampant inflation and economic uncertainty. Hopefully we will not end up in the same boat. According to the article, “the Fed is expected to announce its decision around 2:15 p.m. EDT.” This will be right in the middle of the trading day. I predict that the cut will go through as predicted. I also predict that the markets will be down tomorrow, as people are starting to lose faith that rate cuts are a viable solution to our current economic dilemma.

It has yet to be released to the public, but was anyone aware that there was a new $5 bill in the works. Technically we should have, because the Federal Reserve first announced the new bill to the public on September 20th, 2007. I actually just found out today from a fellow co-worker. Apparently this bill has been in the works for a long time though. According to the press release by the Fed, “because the $5 bill is heavily used in vending and transit farecard machines, the U.S. government began informing the manufacturers and end-users of those machines about the upcoming new $5 bill more than a year ago, to provide ample time to adjust them to accept the new design.”

If anyone has seen the new bill, they will see right away that it is a fairly large change from the past bill. It even seems to have a bit more going on in it than the new $50, $20, or $10 do. The main reason for the redesign of the $5 was because counterfeiters were bleaching the $5 bill, and then reprinting it to look like the $100 bill. Because the security thread and the watermarks were in roughly the same spot and looked similar at a quick glance, it was easy for counterfeiters to accomplish this.

Here is a great site that gives you a more in depth look at what the new $5 bill will look like, as well as some of the security features that go along with it.

Here is a quick rundown of some of the new security features of the new bill. All of the images were taken from the above mentioned site.

This picture shows some of the new watermarks on the new $5. Notice the number 5 rather than a watermark of the President.

The new security thread will be located on the right hand side of Lincoln’s portrait, instead of on the left hand side where it previously was before.

Notice that on this new bill there is no oval outline of Lincoln like before.

Here we have what the Fed calls the “symbols of freedom.” These refer to the stars and the eagle which will be adorning the background of the bill.

Here is how the new serial number will look. As you can see, it is roughly the same, but will be aligned on the bill slightly differently.

Microprinting on the bill will make it harder for scanners to accurately recreate the design of the bill.

Here are the federal reserve indicators. The G refers to the fed that the bill was issued from.

Here is a unique a potentially controversial new feature for the $5 that other newer bills do not have. The exceptionally large purple five on the back corner of the bill was created for the visually impaired so that they can more accurately see what the value of the bill is. Personally, I think it looks a bit odd and out of place, but I can definitely see how it would help out someone with poor vision.

The $100 bill is slated to be the next US bill to have a redesign.

Don’t go throwing out your old $5 bills just quite yet! There is also no need to bring them into your local bank to exchange them out for new ones. They will still work just as good as they did before.

Here is a little known fact that comes from the previous web site. Did you know that “every U.S. banknote issued since 1861 is still redeemable today at full face value and will continue to be legal currency.” So go ahead and toss those fives back under your mattress. You can pull them back out in 2050 and they will be just as good as they are today!