Trefoil, then why leave the discount rate premium at 50 bps? They could have cut to 25 over and then moved it back on 1/30. Such a layup move, imo.
You know how you avoid a Great Depression by not letting a credit system run completely wild. Too late for that. Bernanke is the mop up king. Even Greenspan used to criticize the fed for putting to many coins in the fuse box. We never here about that anymore because Milton Friedman some how concluded that the fed was the master of the universe and could have prevented the great depression.
CNBC's Steve Leesman popped up on Kudlow's show saying a Fed source has told him that the Fed is "considering alternative measures to address liquidity issue." I wonder if black helicopters are getting ready to drop cash in designated drop zones across the country.
Quite honestly, I don't know what his logic was. I would have thought 50 to try to relieve some of the strain in the LIBOR (eurodollar) market, but of course that market is not part of the Fed's mandate. It actually grew up to get around domestic reserve requirements, after all.
i know this is simplistic, but in response to trefoil, it doesn't take a genius to see that a system that perpetually increases the supply of money/debt faster than either the growth of the population or the real economy is on a one way street to failure via the inevitable entrenchment of inflation our govt and citizenry borrow and spend beyond their means. you can say bernanke is a genius for adding grease in the right amts, right times, etc... but the system of debt money itself is flawed, in that it requires perpetually more debt to patch up the implosions of previous debt created bubbles call me a pedestrian if you must, but help me understand where this is wrong. by definition, there will never be enough dollars to pay off the existing dollar debts... in effect, a ponzi
Guys...the markets going to sort this out. Bernanke's heading on a path to destruction. If we dont get the USD situation under control, we're going to be in some serious shit. Bernanke should have said fuck off to the big boys today and risen rates 25 bps to support the dollar's free-fall. The only we we're gonna be alright from this is if we tighten up credit.
There's the supply of money, and there's the demand for money. Reactionaries focus on the supply. Always. It's true that this is frequently the problem. But, it's also true that the supply of money has to increase in order to finance the growth in the economy. Leftists, of which there are, thankfully, a scarcity here, focus on the demand for money, and are constantly hankering for more supply. Once again, it's true that if you raise rates too high, you will kill demand. As I said, we're neutral right now. History will have to judge whether Bernanke is right to slow down here or not. If you're not clairvoyant, there's no way to know. But given his deftness so far, I'm willing to give him a pass.
Sure, but it's not like it operates in a vacuum. Every morning funds open tight because European banks are scrambling for funding. And I'm scared to death of what "other means" are... but Dec FF futures certainly are expecting something.