"The Federal Reserve will lower its policy rate to zero percent by January in its attempt to avert a prolonged recession and to revive the struggling credit market, according to J.P. Morgan Securities analysts." Sounds tempting, but I'm waiting til February, when they start paying us to take money off their hands.

Comments

[Beelzebubba]

The guys in ties are not afraid of a little recession. What they fear is deflation. Giving federal reserve notes away won't stop it. Like all government attempts at fixing anything, it will exacerbate it. "Zero percent policy rate" translates from Japanese experience as "Run Forrest, Ruuunnnnn." Let's pretend that a lender starts with a million dollars and some poor borrower starts with zero. When the loan is extended, the borrower possesses the new cool million and he can show it to you. The lender feels he still owns the cool mill. If you inquire of the lender how much he owns, he'll say "a cool mill" and can show paper to prove it. Now, both the owner and borrower believe there are 2 mill in value where there was only 1. The same with a bank deposit. Joe Blow deposits 1 mill into the Bank of Cone. Joe Blow still lists his 1 mill as an asset, but so does the Bank of Cone. Has the money actually doubled? Does twice as much exist? Not no, but hell no. We all know that but claim to know how to read a balance sheet. When the government cannot give its federal reserve notes away, Mr JQ Public has caught on to this. The market knew it several months before. Toto knew this all along. When he revealed the Wizard for the swindler he was, Dorothy and the gang were too easy on him. I think he was pardoned by today's standards and allowed to leave the country in an air balloon. Maybe the guys in ties believe they'll be sent off like that.

[Bobthesurgeon]

..the most prescient comment i have heard about the financial crisis and the feds response was by one "steady" gordon(name changed to comply with HIPAA) , a sometime patient of mine who also happens to be a sometimes drug dealer, " you mean they steppin on it" to refer to the constant deflation and interset rate reduction the fed is promulgating with their dilutional cuts...yes steady, you can summarize it in that fashion

[Thomas]

"Joe Blow deposits 1 mill into the Bank of Cone. Joe Blow still lists his 1 mill as an asset, but so does the Bank of Cone."

At this point the Bank of Cone lists the mil as a liability. Once they lend it to someone else it becomes an asset to the Bank and a liability to the borrower. Ya folla?