The Fed lowers the rate it charges its member banks for overnight loans, which then permits banks themselves to lower rates for borrowers. If banks find takers for the money, the effect is to create credit that is unjustified by the pool of savings. Assuming no other changes, this new money waters down the purchasing power of all existing money. The banks and their connected interests are able to spend the money before prices rise, while the consuming public gets stuck with the bill down the line. The effects of inflation are deadly for long-term growth.
Inflationary expectations can quickly take hold.
Instead of saving, then, consumers began to realize that they are far better off spending, that is, getting rid of their cash before its purchasing power decreases. These spending patterns further increase prices until a spiraling upward begins to take effect. They say politics makes strange bedfellows. Perhaps that's especially true considering the unlikely and uneasy alliance between some gay intellectuals and conservatives on a handful of freedom issues. For instance, my favorite lesbian Camille Paglia wrote a stunningly succinct defense of a tax cut for Salon Magazine.