[rohry]

"In the Fed’s Grand Experiment to fight off deflation and burn the currency, the public is being rewarded to borrow and consume; while savers and investors are being punished by negative returns. The Fed has indicated and alerted Wall Street that it will monetize assets in the bond market to keep interest rates fixed or within a narrow range."

[rohry]

Market WrapUp is delivered...

[SamAdams76]

I picked up DVD Players at Circuit City for $49 last Thursday. They had them stacked up practically to the ceiling right by the doors as you come in. They were priced to move and they did!

[Sungirl]

All I think of when they talk about people spending more money is that the bankruptcies are going to skyrocket next year.

[A. Pole]

Fed’s Grand Experiment to fight off deflation and burn the currency

I remember when Fed was zealously fighting "potential" inflation by raising the interest rate many times (in 2000). Fed did it long after the stocks started to collapse. Now Fed is doing the reverse.

I wonder if such pattern of intervention does not increase the size of pendulum swings? Maybe Jude Wanniski is right, suggesting that the gold at a fixed price should be a reference? (In other words money should be issued to keep price of gold fixed?)

[steveegg]

Don't have a clue what the Grand Experiment means, but I know damn well what this little tidbit means:

The bond market isn’t the only problem the Fed has to face it may also have to start monetizing all of the governments debt. The official debt limit of $6.45 trillion is about one month away from being breached. Passed late spring, the debt limit has been raised by $450 billion. Tjhere is only about $60 billion of that left. This means that when Congress returns after the holiday recess, they will have to raise the debt limit by another trillion dollars just to be safe.

More taxes.

[fogarty]

"In a survey of residents nationwide, shoppers said they intend to spend less this year than last year. If they spend, it will be on sharply discounted items. Carefree spending days of the 90’s are gone. Now it takes substantial discounts to get shoppers in the stores. "

Ain't that the truth. And those who are wise (and those still blessed enough to have a job) are clamping down big-time on spending. My wife and I are spending no more that $250 this year for presents. A lot of presents are small <$10 and we are making handmade stuff as well (ceramic dishes, etc).

If indications hold out, the next big wave of layoffs will hit in first quarter - so it's not a time to be spending more than absolutely necessary. It's time to be socking away savings as much as possible.