Depends on who you are. If you are a borrower, then in all likelihood you will rejoice at Greenspan and company as they chase something lurking in the shadows of the economy. Alan Greenspan, the Federal Reserve Chairman has been very active on the talk circuit lately and what he has suggested both in the way of encouragement and caution was that just because the economy appears well on the road to recovery, you probably are not looking at the big picture. Or at least the one the F.O.M.C. is looking to for guidance.

These financial appearances can be deceiving to the untrained eye. The harsh reality that the Fed Board lives with is simple. A healthy uptick of the inflation index would be good at this point in terms of pricing power. Deflation however is an evil once unleashed can not be so easily reversed. The main problem dealing with this kind of a situation is experience. This country has relatively few instances in its economic past on which the Chairman can draw for reference. With the conomy becoming a creature of its own making, learning as you go can be expensive and possibly damaging. Although the cut amounted to only a quarter point, the amount is actually negligible.

A borrower would see the biggest help come from any open equity line of credit they might own. Tied to the prime rate, the interest on these lines would fall and in a relatively quick way. Eventually some of this cut would filter into longer term loans as Mr. Greenspan has done more than suggested he would like to have happen. Credit cards might have the opposite reaction to the thirteenth whack at the overnight lending rate. Recent reports have suggested that rates for cards are starting to climb. The reason is simple. So many folks have tapped the equity in their homes, that card companies are actually beginning to challenge your credit worthiness. Worried that many Americans have overextended themselves, card companies are attempting to cover the possible new risk to their business.

Savers on the other will be forced to look longingly at days gone by when money markets yields of 6% and sometimes more were comonplace. Barely two and a half years later, those same funds are barley getting 0.7%. Even with the current low inflation, this pittance of a return becomes negative rather quickly.

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