The Fed’s Magic 8-Ball Strikes Again: Third Time’s the Harm

**2001: The Dot-Com Bubble Disaster**

In 2001, tech stocks were booming, everyone was making fortunes, and it seemed like the sky was the limit—until the bubble burst. The Fed gave their Magic 8-Ball a shake, cut rates by 50 basis points, and what followed? The Nasdaq tanked 76% over the next three years. It was one of the most brutal market crashes in history, wiping out trillions in wealth. But first, there was a nice little sugar rush. After the rate cut, the markets rallied for about 4 to 6 weeks, making everyone believe the worst was behind them. Of course, the market eventually remembered that unprofitable dot-com stocks don't magically become valuable overnight, even with cheap money. After the initial high, the Nasdaq continued its slide, eventually crashing by three-quarters. Fast forward to 2007. The housing market was a ticking time bomb, but the Fed once again gave the Magic 8-Ball a whirl and cut rates by 50 basis points. The result? The entire financial system crumbled. The Nasdaq dropped 56%, banks collapsed, and we entered the worst economic crisis since the Great Depression. Millions lost homes, jobs, and savings, while the Fed stood by, shaking the orb and hoping for the best. And yes, there was another sugar rush. The stock market, in its predictable fashion, rallied for 3 to 4 weeks after that cut in September 2007, before realizing that all the cheap money in the world couldn’t stop the financial house of cards from collapsing. **2007: The Great Financial Crisis**

**2024: Here We Go Again**

Now, here we are in 2024, and the Fed has reached for the same trusty Magic 8-Ball, shaken it once more, and decided to start with—surprise—another 50 basis point rate cut. But here’s the thing: this time will be no different. In fact, it could be worse.