Digg NOW: Fed cuts rate another 1% to 2.25%!

[ThePieSwindler]

Feds cut rate by 3/4 %. Federal interest rate is now 2.25%. This makes prime rate (always 3% higher than federal) is at 5.25%. This affects variable rates.
This will make the dollar go down, increasing inflation. Bonds are tied to inflation. Fixed interest rates are tied to bonds. Therefore, not much help on fixed rates.

Yes, but the purpose of cutting Fed fund rates is to increase the supply of loanable funds between banks. Monetary policy can really only target a single issue, and has many side effects in the short run (thus the biggest arguement against the fed being the Law of Unintended Consequences). So they aren't trying to deal with fixed rates, but rather the solvency of financial institutions and liquidity of credit, since thats the issue in the first place (that started with the MBS/subprime crisis). So you're right, yes, but the Fed really doesn't care much, since its not their intent.

They are between a rock and a hard place, really, though much of it was caused by what were previously thought of as small side effects created in the first place by the Federal reserve.

 

[LEK]

Can I ask a question:

From this article:

http://biz.yahoo.com/ap/080318/fed_credit_crisis.html

There is this image:

Captioned with:



Isn't the "President's Working Group" = "The Plunge Protection Team" ... a group that supposedly was denied even existing?

Only in John McCain's mind...sunshine...

 

[Join The Paul Side]

I can't stand the Fed.

 

[libertythor]

bump

 

[LibertiORDeth]

This just made me think of McCain's "Well, I think we would all like to see more sunshine".

 

[libertythor]

This just made me think of McCain's "Well, I think we would all like to see more sunshine".

His face looks like where the sun don't shine!

 

[libertythor]

bump

 

[libertythor]

lets get this to the front page

 

[libertythor]

bump

 

[libertythor]

bump

 

[KingTheoden]

Just a minor correction: The Fed Funds rate was cut by 75 basis points to 2.25%. On Sunday, the Fed cut the Discount Rate by 25 basis points to 3.25%. The Fed Funds rate is the rate at which banks lend to each other (and the one that we are most concerned with; usually the media is referencing this rate). The Discount Rate is the rate at which financial institutions can borrow directly from the Federal Reserve.

 

[MoneyWhereMyMouthIs2]

I don't believe for a second that they don't get what is going on. I think they are trying to keep the whole thing together at all costs. If it falls apart...there will be HELL to pay...and I'm sure they don't want to be in that crossfire.

I agree with you. These people aren't stupid. They just pretend to be stupid when convenient for them.

 

[libertythor]

Just a minor correction: The Fed Funds rate was cut by 75 basis points to 2.25%. On Sunday, the Fed cut the Discount Rate by 25 basis points to 3.25%. The Fed Funds rate is the rate at which banks lend to each other (and the one that we are most concerned with; usually the media is referencing this rate). The Discount Rate is the rate at which financial institutions can borrow directly from the Federal Reserve.

I tried correcting the title right after posting, but it only corrected it in the subheadline on the first post.

 

[malibuu]

I don't believe for a second that they don't get what is going on. I think they are trying to keep the whole thing together at all costs. If it falls apart...there will be HELL to pay...and I'm sure they don't want to be in that crossfire.

They get what is going on ?- or do they just pretend to know and understand because Bennie Bernacke went to Princeton ?

When the Euro costs $2 bucks they still WON'T get it.

The Greenspan-Paul Congressional Exchanges 1997-2005 is at :

http://www.usagold.com/gildedopinion/greenspan-gold.html