Posted on 02/10/2010 7:38:22 AM PST by tobyhill
The stock market is falling as Federal Reserve Chairman Ben Bernanke details plans for dismantling the central bank's economic support measures.
Bernanke says in prepared remarks to a House committee Wednesday that the Fed likely will begin tightening credit by raising the interest rate it pays to banks on the money they have deposited at the Fed.
That would lead to an increase in borrowing rates for consumers and businesses. The Fed chief cautioned that the central bank is months away before it's ready to boost interest rates.
(Excerpt) Read more at msnbc.msn.com ...
Don’t know why it makes me want to “LOL” but it does. My family could go down for the count. They can’t unwind the “stimulus” — they can’t stop it — without a radical reduction in spending and taxes. Do enough Republicans know that or are “we” all Keynsians now?
The fed doesn't pay interest to the banks on money they have deposited there. The rate in question is the rate the Fed CHARGES banks for borrowing overnight funds.
Oh what a tangled web we weave when first we practice to deceive.
Wow, I just locked in a 30 year fix loan at 5% yesterday. I’m glad I did.
Bingo. The Feds need more money from borrowers to pay for the massive debt load that the Government accumulated.
Oh yeah, this is going to help the economy.
Months away could mean just 5-6 months, which at this rate would crash the economy all over again.
They were going to have to do it eventually but now it’s really going to hurt. I foresee an increase of at least 3% in the prime lending rate which will really hurt the lenders to small businesses.
“Do enough Republicans know that or are “we” all Keynsians now”?
...”Keynesian Economics” has been in full play since Jan ‘09.
I wonder if the only way out is to revalue or institute a new currency.
Then the debt problem would magically be a fraction of what it is now. And we all end up as paupers.
Heh. Regardless, here’s where US investors are going.
China PLA officers urge economic punch against U.S.
http://www.reuters.com/article/idUSTRE6183KG20100209
“BEIJING (Reuters) - Senior Chinese military officers have proposed that their country boost defense spending, adjust PLA deployments, and possibly sell some U.S. bonds to punish Washington for its latest round of arms sales to Taiwan.”
I agree. If the Feds plan on increasing the interest rates then they need to do it quickly and without warning to get the shock out of the way.
“...”Keynesian Economics” has been in full play since Jan ‘09.”
I think it’s been longer, it was full out Keynesian when GWB said he sacrificed free market principles to save the economy.
Or instead of devaluing we could try a small government solution since big government hasn’t worked. Cut taxes, cut spending, cut regulations.
Not low enough to buy yet. Hang on a bit.
Yep. He trusted his advisers, who are Keynesians.
Are there heavy-hitter economists who aren't? (Aside from Dr. Thomas Sowell) A future Republican president should have a Milton Friedman by his side.
The Fed started paying interest on bank deposits at the Fed last year. Or maybe late in ‘08.
So now they have 3 interest rate tools - the Fed Funds rate, the Discount rate, and this new one.
“it was full out Keynesian when GWB said he sacrificed free market principles”
...sad but true. Still trying to get my head around the “Miss Me Yet” billboard. I do miss him but had to lower the bar.
the markets have become addicted to Federal Smack and can’t stand the thought of coming withdrawl pains
I noticed that, too. The statement doesn’t make sense.
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