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mises
Joined: 05 Nov 2007
Location: retired
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 Posted: Tue Dec 16, 2008 11:42 am Post subject: Fed Rate Nears Zero |
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Dec. 16 (Bloomberg) -- The Federal Reserve may today reduce its main interest rate to the lowest level on record and prepare for one of the boldest experiments in its 94-year history: using its balance sheet as the key tool for monetary policy.
The Fed�s Open Market Committee will probably cut the benchmark rate in half, to 0.5 percent, according to the median of 84 forecasts in a Bloomberg News survey. The central bank may also signal plans to channel credit to businesses and consumers by further enlarging its $2.26 trillion of assets.
Chairman Ben S. Bernanke plans new steps to combat the credit crunch and prevent the worst recession in a quarter century from turning into a depression. The danger is the Fed�s credibility could be hurt if policy makers don�t clearly communicate a new strategy of manipulating the supply of money, at a time when FOMC members have diverging views on the subject.
�We expect the FOMC to leave the policy outlook open- ended,� said Louis Crandall, chief economist at Wrightson ICAP LLC, the world�s largest broker of trades between banks, in Jersey City, New Jersey. �The FOMC may have no choice but to muddle along for a while longer� because �there is no sign that a consensus on a new approach has begun to emerge,� he said.
Investor speculation that the Fed will ease monetary policy today pushed yields on 10-year Treasury notes to the lowest since 1954. The dollar traded near a two-month low against the euro and was close to its weakest level in 13 years versus the yen. |
http://www.bloomberg.com/apps/news?pid=20601087&sid=aJOGrevCE.M4&refer=worldwide
This is getting absurd. Monetary policy is obviously not working. |
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mindmetoo
Joined: 02 Feb 2004
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| Posted: Tue Dec 16, 2008 2:52 pm Post subject: Re: Fed Rate Nears Zero |
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| mises wrote: |
This is getting absurd. Monetary policy is obviously not working. |
Wow you mean nothing has changed in only two months? I would not blame monetary policy.
Why invest when the government might just buy your asset and give you a good rate? |
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sojourner1
Joined: 17 Apr 2007
Location: Where meggi swim and 2 wheeled tractors go sput put chug alugg pug pug
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| Posted: Tue Dec 16, 2008 3:07 pm Post subject: |
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| It's actually Bush's final treat to the rich not that it will work in fixing the economy. All along, the Fed's interest rate moves have only benefited the rich because when the rates decrease, the stocks rally. Because they know this is Bush's main strategy to benefit his well heeled supporters, it's an easy bet for them to buy before the rate increase, then sell, and realize capital gains that resulted from no actual productive economic performances. This cycle surrounding the interest rates made many wealthy men, super wealthy, but at the cost of the millions and the economy as a whole. It's a brilliantly engineered way to suck or fleece it all from average knuckleheads. The rich don't care about tomorrow or next year; only how high and mightily proud they are today for realizing a capital gain the easy, but unproductive value destroying way. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Tue Dec 16, 2008 3:21 pm Post subject: Re: Fed Rate Nears Zero |
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| mindmetoo wrote: |
| mises wrote: |
This is getting absurd. Monetary policy is obviously not working. |
Wow you mean nothing has changed in only two months? I would not blame monetary policy.
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Go to the library and get Krugman's Return of Depression Economics. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Tue Dec 16, 2008 3:29 pm Post subject: Re: Fed Rate Nears Zero |
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| mindmetoo wrote: |
| mises wrote: |
This is getting absurd. Monetary policy is obviously not working. |
Wow you mean nothing has changed in only two months? |
Wait, 2 months? The Fed started loosening on Sept 18, 2007. Where have you been?
http://www.newyorkfed.org/markets/omo/dmm/historical/fedfunds/index.cfm
Catch up. |
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Don Gately
Joined: 20 Mar 2006
Location: In a basement taking a severe beating
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| Posted: Tue Dec 16, 2008 3:50 pm Post subject: |
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Pretty soon they're going to be paying people to take money,
And that's when I pounce. |
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sharkey
Joined: 12 Oct 2008
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| Posted: Mon Dec 22, 2008 10:17 pm Post subject: |
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| Don Gately wrote: |
Pretty soon they're going to be paying people to take money,
And that's when I pounce. |
lol, like a cat in waiting |
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Hater Depot
Joined: 29 Mar 2005
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| Posted: Tue Dec 23, 2008 9:07 pm Post subject: |
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| Don Gately wrote: |
| Pretty soon they're going to be paying people to take money |
The fed rate actually went below zero this past week. So in effect, they did.
Think about that. People felt more comfortable parking their money on T-bills at a guaranteed loss rather than investing in something else or just leaving it in a bank account. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Tue Dec 23, 2008 9:42 pm Post subject: |
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| The flight to safety appears to be coming to an end. |
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