What happens when the fed gets to 0?????

Discussion in 'Trading' started by wallstprodigy, Feb 26, 2008.

  1. I want to ask something to all the experts out there. Everyone says lower rates lower rates lower rates to kill inflation. Ok... so they do that.

    What happens if they get down to 0.5, 0.75 or worse 0.00?????

    Just wanted to get some opinions from people.

    Personally i believe the need to lower rates is very overrated. They are as low as they need to be. Keep lowering and we will just redo the mess that we are in now.
     
  2. eagle

    eagle

    Another housing boom.
     
  3. Lowering rates won't kill inflation. If anything, it will make inflation worse.

    Once the Fed "uses up all its interest rate bullets", it's likely to start "monetizing debts". That is (1) print money to buy T-Bonds, and (2) buy defaulted upon debts from institutions.

    Then we will be in MORE SERIOUS-ER DOO-DOO. The rest of the world should be dumping bonds and crashing the $USD.
     
  4. Div_Arb

    Div_Arb

    Boy, you folks are a bunch of Milton Friedmans over here!
     
  5. All you have to do is look what the Japanese did when they slashed rates that low 10 or 15 years ago.

    Cutting rates is inflationary. If the banks wont lend anyone money becasue they've tightened credit restrictions so much it does not matter what the rate is they're still not lending and financing.
     
  6. The U.S. dollar carry trade....+1 on the housing reboom. More than likely severe Fed cuts will not happen.

    Akuma
     
  7. lotsa idiots here. low short-term rates don't necessarily cause housing booms.

    fed funds were very low through much of the 50's and half of the 60's, but housing only increased slightly (when adjusted for inflation). some years, housing was flat or declined. the annualized increase was nothing like 2002-2005.

    everyone!! please stop perpetuating this silly myth that the ff rate of 1% a few years ago single-handedly caused this r/e boom.

    if 15 years of low rates didn't cause a boom 50 years ago, what makes you think 3 years of low rates caused it now?
     
  8. "Lowering rates won't kill inflation. If anything, it will make inflation worse.

    Once the Fed "uses up all its interest rate bullets", it's likely to start "monetizing debts". That is (1) print money to buy T-Bonds, and (2) buy defaulted upon debts from institutions.

    Then we will be in MORE SERIOUS-ER DOO-DOO. The rest of the world should be dumping bonds and crashing the $USD"

    Thats exactly what they will do.