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How do you guys like zero percent fed funds? WOW!!!

CASH IS KING BABY!

400+ DOW at least today.

I’m curious to hear predictions on what banks will do, if anything?

So are we repeating what Japan did? I don’t think it will get bad enough where interest rates become negative (Customers would literally pay the bank to secure their money). From an L1er awaiting results, this seems to be the opposit of the crowding out principal. Won’t people flock to the stock market since savings rates are hardly worth the drive to the bank now? I am interested to hear what Bchad and Joey have to say about this.

I’m gonna go with a major reversal at end of day signalling ‘we think this will not end well’ if they haven’t been flocking when rates were 1%, i see no difference between 1% and 0%. 1% is basically zero in my mind, plus, the market expected at least a 50bps so this seems like they’re panicking at the fed.

ditchdigger2CFA Wrote: ------------------------------------------------------- > So are we repeating what Japan did? I don’t think > it will get bad enough where interest rates become > negative (Customers would literally pay the bank > to secure their money). > > From an L1er awaiting results, this seems to be > the opposit of the crowding out principal. Won’t > people flock to the stock market since savings > rates are hardly worth the drive to the bank now? > > > I am interested to hear what Bchad and Joey have > to say about this. Not only that, it’s supposed to increase investment by companies. The Fed wants businesses to take out cheap loans to fund expenditures and spur growth.

Paul Krugman gave an interview to Germany’s Spiegel earlier suggesting that the monetary policy is no longer an effective regulating mechanism, and it’s time to emphasize fiscal policy although he is against it in normal economic times. I think the big economists are missing one simple thing. I, Joe, have a few pennies saved. What’s stopping me from spening them is not the fact that I don’t have them (I do) and not the fact that I anticipate losing my job (knock on wood), but the fact that everyone else is toughing it out on the bench. Peer pressure.

^^ that is an interesting theory, hmm a peer pressure component ^^

I’m buying WIN which gives about 12% fairly assured yield!

What implications does everyone think this will have on carry trades?

I am already carrying US dollar like there is no tommorow In my pockets that is

end of dollar rally?

Someone above mentioned the ineffectiveness of Monetary policy. I’d like to chime in on that. Why lower interest rates to try and prop up the economy, when excessive spending was what started this mess in the first place?

chad17 Wrote: ------------------------------------------------------- > Someone above mentioned the ineffectiveness of > Monetary policy. I’d like to chime in on that. Why > lower interest rates to try and prop up the > economy, when excessive spending was what started > this mess in the first place? Excessive government spending, not consumer and small buisness spending.

well excessive consumer spending in the form of credit lines is what i was getting at. plus, how willing are banks to lend at these rates? how willing are banks to lend anyway, given all the liquidity problems they have? i assume they’re going to have to borrow more from the Fed now?

If I am a CEO of the bank and I have a few hundred million dollars of exposure to Madoff and a few other ticking time bombs that can blow up any day (or already have), borrowing for free from the Fed is like a life jacket for a drunk tourist who just fell of the cruise ship. Lending to business and consumers is the last thing on my mind. Hence the ineffectiveness of the monetary policy. Now, if I am a state government and I run a fiscal deficit by building bridges, roads and undertaking other infrastructure projects, I am creating jobs, supporting businesses, i.e. reach the consumer. I think that’s Krugman’s point.

my thoughts exactly. but in reality, banks are going to have to borrow from the Fed to increase the supply of money in the economy through loans, aren’t they? so how’s the Fed going to respond to this? print more dollars? take on more debt by selling treasuries abroad?

That’s it - Fed has definitely shot all their bullets…

comp_sci_kid Wrote: ------------------------------------------------------- > I am already carrying US dollar like there is no > tommorow > > In my pockets that is Me too, how much do you carry around in your pockets? I usually carry around $300, especially fond of 100bills. I just like the feeling of having cash, know you like, just in case or whatever. I actually had to buy a bigger wallet when I was in China because 21 of those big a$$ 100RMB bills is a hefty mass.