I predict a rate cut to MINUS 1%

Discussion in 'Economics' started by stock777, Dec 16, 2008.

  1. and a 2000 point Dow spike.
  2. We are already there. it costs .12 to borrow interbank fed funds and the fed pays you 1.0% to hold it. Thats almost -1.0 int rate to recapitalize the banks.
  3. You mean the banks get free money, and the fed then pays them interest on that free money complements of the American tax payer?
  4. No, no,no...you got it all wrong. Compliments of our Chinese lenders!
  5. isnt it called printing money.

  6. But its not even the same as expanding the money supply, its the cost of borrowing that is now negative! They are basically now paying you to take their money! Wtf! I should go to my bank and ask them to pay me for giving me money.
  7. Believe it or not, what the fed just did actually reduced their capitalization rate of the banks. Now they only pay .25% on reserves, not 1%...

    I'd bet a lot of weird market distortions may disappear in the next few weeks because target is more in line with effective rate.
  8. Bob111


    how much is the mortgage rates will be?
  9. eagle


    At least you got to be accurate in your writing to strengthen your prediction. The "MINUS 1%" means "-1%", meaning that theoretically I can borrow $100 from you and pay you back only $99, period. What a dream deal for all borrowers in the world. :D

    PS: So you mean "less than %1".

  10. The Fed also lowered the discount rate paid by commercial and investment banks for Fed loans by 0.75 percentage point to 0.5%.
    #10     Dec 16, 2008