In 20 Minutes The Fed Will Become Irrelevant

Discussion in 'Economics' started by Aaron Copland, Dec 16, 2008.

  1. Haven't been trading long have you?

    This is common, cut rates = run up. Amateurs buying & weak shorts covering.

    The real reaction will happen over the next several days, although it may be postponed due to holidays.
    #11     Dec 16, 2008
  2. Initially I did not like the perma-bull reactions (Aug '07) to Fed shenanigans.

    But of course they proved fruitless in flexing their powers <i>over the market</i>. It was a nice bear ride all the way down.


    Now that the market is again reacting positively and exuberantly to symbolic rate cuts - I like it too!

    Nice move on their part to time the extra .25 cut and once again give a perception of power as we watched all the heady buying.

    "Price rarely goes far without volume" seems will always hold true. I was patient to wait to get on the right side of the market and it proved out, fine.

    So the Fed will now use their powers in the correct fashion as they have now signaled they have entered a quantitative easing policy.

    All is well on the U.S. front. We live to capitalize another day.
    #12     Dec 16, 2008
  3. Adjusting the discount rate is not the only way the Fed controls the money supply.

    When was the last time they adjusted reserve ratios?
    #13     Dec 16, 2008
  4. harkm


    Last time was in 1990 I believe. Maybe they looked at that and decided it would have no effect since banks aren't lending what they have now and lowering the requirement is moot.
    #14     Dec 16, 2008
  5. This is not Japan because the FED is being much more aggressive than what the BOJ did, with a TON more ammunition, not too mention the fact that the BOJ was very late to the crime scene.

    You also conveniently fail to mention that the BOJ raised rates far too early in the game as the Japanese economy was starting to grow again. I would suggest that the FED is very cognizant of this fact.
    #15     Dec 16, 2008
  6. I don't think the traders fighting the fed have been loosing. The Fed is loosing. They have cut to ZERO and were wayyyyyyy lower.

    Fed is HELPLESS.
    #16     Dec 16, 2008
  7. The production chains are disrupted so bad that Chinese are shutting down factories. Not for long, the inflation pressure will show its ugly head once again.

    Food price haven't drop that much lately. Don't think it will go lower any more. And so is the average wages.
    #17     Dec 16, 2008
  8. Funny, I guess treasuries are now a charitable donation to Uncle Sam.
    #18     Dec 16, 2008
  9. The only thing they are cognizant of is they are failing. Hell throwing money from the sky won’t work either. The only thing that will work is TIME.

    Were we these dip shits when all this was growing in late 2006. I can remember Greenspan saying when the yield curve started inverting “that doesn’t mean we are going into a recession"

    Here is what Bernanke said this year. “The subprime crisis is contained"

    They just love ROWING THE ECONOMY. Bunch of half wits.
    #19     Dec 16, 2008
  10. The reserve requirement is obsolete. When a bank lends 40x what they take in the reserve requirement is meaningless. Even commercial banks can lend more than 90% of their deposits. The US does not operate on a Reserve Requirement system like they teach in textbooks. The US operates on a perpetual debt system. It's a ponzi scheme, similar to what Madoff was doing. Madoff needed that next deposit to keep it going. The US economy needs that next loan. There isn't much difference.

    #20     Dec 16, 2008