Posted on 02/22/2010 7:33:34 AM PST by shove_it
Edited on 02/22/2010 11:42:42 AM PST by Admin Moderator. [history]
...why on earth would Ben & Co. raise rates? The answer should be obvious if you’ve been listening to me and my brethren for the last several years: Bernanke is terrified of inflation. He knows that U.S. debt is losing its cachet. He knows how much money has been printed. He knows the American consumer is an empty gun. He knows what’s coming, and he figures if he starts raising rates now, he can postpone the inevitable catastrophe. And maybe he can. If he raises rates to 10,000 basis-points (that’s 100%, by the way, and even that wouldn’t be enough).
You think that’s crazy? Ben doesn’t. After Friday, he’s more terrified than ever. Sure the dollar went up a little, but so did gold, oil, and stocks, and that’s not supposed to happen when the Fed raises rates. No, when rates go higher, it’s supposed to mean slower growth ahead, and less opportunity for investment. The only real exception to this rule is the anticipation of inflationary price increases — in which case markets don’t appear to care about slower growth, because investors are more focused on the likelihood of weakening currencies. In this case, markets anticipate higher prices and move up in spite of higher rates.
That’s what happened Friday. And it’s not good.
[...]
Inflation isn’t why the Fed raised the discount rate.
The Fed has signaled that they’re going to withdraw the easy credit and liquidity measures put in place to “rescue” the banking sector. The discount rate raise means that the Fed wants to transition back to being the lender of last resort, rather than being the lender of first resort.
Censor ping.
the imagery of greenbacks as toilet paper tells us all we need to know here
“Inflation: Why Markets Ignored the Fed Rate Hike”
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Hike? More like a pip squeak hikette.
WAY too little, and WAY too late.
Get it while you can.
Ok, I think we need a Freeper economist to decide this - I see the photo as "the imagery of greenbacks coming out of his a$$" - who is correct?
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p.s. Note that, in the spirit of the followers of Spartacus, I am identifying myself personally in my tag line, and I await the Alinski media onslaught.
That’s the way I took it too.
I hope someone takes that picture down. That is a disgrace to the flag.
They apparently confused the discount rate with the reserve rate.
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