Nowhere in those articles does it say that the interest is "annualized". Because everyone knows it is annualized...…....….
I could be wrong, but I believe the Fed's thinking" is that those interest rates will draw back in some of the worthless dollars they've printed,
Draw back in from where? To where?
"... but I believe the Fed's thinking" is that those interest rates will draw back in some of the worthless dollars they've printed."
"Draw back in from where ?
To where ?"
The Fed has printed all these worthless dollars, either in real paper or in electronic money (which, sooner or later, becomes real dollars) and put them in the banks to be loaned out and used, whether to cover Federal dollars in peoples' pay, or retirement, or whatever.
Remember the three aircraft that Obama took to the Muslims with pallet loads of cash (1.5 Billion Dollars), to get the four hostages back and a "Nuclear Deal", and the rest of the 150 Billon Dollars of funds were transfer electronically to them..
Then later, when their story is that "we're in better shape economically", they raise interest rates to take back in, or remove from the economy, those worthless dollars they suddenly made out of thin air.
I think what's really going on is
banks are loaning out more money than they have to cover businesses
that are trying to raise funds thru buying and selling hedge funds.
When their "short bets" are going the wrong way, and they get a "Call", they have to come up with the cash to cover those "shorts" and they borrow it from the banks (who say they'll loan them the funds, but then at the end of the day, the banks realize that they don't have those funds to loan.)
Or a similar situation could happen with their "long bets" that those businesses were counting on to be able to sell at a profit, but come payroll time, the "longs" have lost money and they don't have the funds to cover payroll.
So they call the banks to borrow the funds to cover payroll, and the banks say they'll loan them the funds (that the banks don't have) and count on the Fed's repurchase (repo) loans.
All in all, it's a sign of really big trouble, bad management, and poor judgment.
The Fed is simple delaying the economic collapse that we need, in order to get rid of these bad managers and companies.
And the TAX PAYERS are the ones who'll get stuck with the bills, and who's savings are diminished with this 'pretend-it's-not-Quantitate Easing' farce called "Repurchase (repo) Loans".
The quicker we get a "reset" and weed out these bad players, the quicker we can have real recovery.