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164 Comments
- agotfredsen, on 10/30/2008, -1/+29Actually, because of inflation the real interest rate might already be negative.
- WordsnCollision, on 10/29/2008, -2/+29How low can they go? At 1% they're running out of room in a hurry.
- tortlord, on 10/29/2008, -1/+21This matches the lowest level for this overnight bank lending rate ever.
- Nattybumpoe, on 10/29/2008, -3/+22Are they going to have to go to a negative percentage soon? ... Oh wait.
- S5S5S5, on 10/30/2008, -7/+26How does Bernanke sleep at night? Knowing he just makes up interest rates that are not based on any financial theory or formula? Just base the interest rates on today's temperature divided by 10 and we can save the government Bernanke's salary.
- inactive, on 10/29/2008, -7/+24"Nothing did more to spur the boom in stocks than the decision made by the New York Federal Reserve bank, in the spring of 1927, to cut the rediscount rate. Benjamin Strong, Governor of the bank, was chief advocate of this unwise measure, which was taken largely at the behest of Montagu Norman of the Bank of England....At the time of the Banks action I warned of its consequences....I felt that sooner or later the market had to break."
Money baron Bernard Baruch in Baruch: The Public Years (1960) - Hangly, on 10/29/2008, -1/+18IIRC Japan once lowered it to zero.
- inactive, on 10/30/2008, -1/+15You borrowed a "pile of dollars" and invested it in "a free market economy in the Caribbean?" Why don't you go spout that ***** somewhere else, because we don't buy it.
- breckinshire, on 10/30/2008, -0/+10You're mom's under prime.
- OptionNewbie, on 10/30/2008, -1/+11Is this anything like what happened to Japan?
- imightbewrong, on 10/30/2008, -6/+16Allow me to help you understand what you have quoted. In 1927 2 years before the stock market crash, speculation was out of control. Everyone was investing in stocks like RCA because they were thought to never go down. People over invested in risky stocks because everyone felt that things were going to continue to get better and better. The Fed lowered the interest rates making it even easier to invest, and easier for banks to be careless with money. The economy was growing at an unwieldy pace and lowering the interest rates made things worse.
THAT HAS NOTHING TO DO WITH WHAT IS HAPPENING RIGHT NOW!!!
Right now banks and investors are scared! credit markets are seizing up! its hard for people and individuals to get loans! So the Fed is making it easier for banks to loan to each other, ergo making it easier for banks to loan to businesses and people who need it.
If you are trying to use that quote to imply that the Fed's actions are making things worse or going to cause another depression, you are quote mining and taking the quote completely out of its context. - Hetman, on 10/30/2008, -4/+13Well the economic professors of the last 10-15 years have put us into this mess, does it really matter what a bunch of people on the intertubes are commenting about it?
- WordsnCollision, on 10/29/2008, -1/+10That's right - didn't seem to help much though, did it?
- vsujohn2, on 10/29/2008, -2/+11Lets see.... you want to borrow $1,000,000?
Here's $1,010,000!!! - jsd8cc, on 10/30/2008, -2/+10This is like putting a band-aid on a tumor.
- y0y0howsdajell0, on 10/30/2008, -2/+10The fed it just great. I mean, really. They're all a bunch of genius'. I stand in awe of them as they artificially pump up the economy to increase the credit market, then don't enforce it so JP Morgan can buy more banks, and then make the dollar worth toilet paper. Good job, Bernake. HOW DO YOU SLEEP?!
- disparue, on 10/30/2008, -1/+9I don't see why you were dug down. (rate of inflation) - (nominal interest rate) = (real interest rate)
- mdoverkill, on 10/30/2008, -4/+11You've posted that comment on several economic threads, yet you never add anything of substance to the topic. If the digg economic professors are wrong how about you explain WHY they are wrong instead of complaining about it.
There is a lot of info out there about economics if you are willing to do some research, you don't need formal training to understand the basics of it.
http:www.mises.org
is a good place to start, a lot of their more famous publications such as 'The Case Against the Fed' by Murray N. Rothbard are available for free - dukeeeey, on 10/30/2008, -5/+12good bye US dollar
- sulthernao, on 10/30/2008, -1/+8That's the rate banks get, not you. Even if you were prime, you would still pay interest. You're probably under prime.
- allaboutdatiki, on 10/30/2008, -4/+11Why don't they just freaking pay US to borrow money? :) Say, we ask for $1000 and only have to pay back $900. You want a stimulus, I'll give you a stimulus ... bwahahahahha
- rocke86, on 10/30/2008, -1/+8I'm tired of competing with the Fed for money. My savings rate is at .35 and I expect it to go much lower on this news. Get rid of the Fed and savings and CD interest rates would skyrocket.
- skipdog172, on 10/30/2008, -2/+9What makes me laugh so hard is that if you go out and talk to economic professors, they will all have their own little theories on this mess and how we fix it. Economics is not some kind of exact science. Seriously, go ask multiple economic professors what the solution is or if this rate cut is good or bad and you will hear all kinds of responses.
All economics professors do not magically believe in the same thing. They don't all know exactly what we did wrong and how to fix it. I just think it is laughable to poke fun at anybody talking about economics because all of these economic professors have only heard the same theories as anybody taking their class. There is no special economics knowledge that only the professors are aware of. Stop acting like anybody talking about economics is wrong and ignorant just because they aren't economics professors. There is no magical "economics formula" that the economic professors understand that anybody with the time can discover through research and learning or taking some economics courses. All we have to go on is different economic theories that cannot even be proven by a 60-year span.
I just hate this whole "YOU CANNOT TALK ABOUT ECONOMICS BECAUSE YOU MUST BE STUPID BECAUSE YOU ARE NOT AN ECONOMICS PROFESSOR" talk. It is just bull. Take an economics class and find out how your professor doesn't have any special magic knowledge. He just understands various economic theory very well. - sulthernao, on 10/30/2008, -3/+10WTF? There is a very specific reason why he did it - to encourage banks to give out loans. Same with the bailout plan.
- adamroach, on 10/30/2008, -0/+7A diller, a dollar, a ten o'clock scholar!
What makes you come so soon?
You used to come at ten o'clock;
Now you come at noon. - footfwd, on 10/30/2008, -0/+7The economy is all like "can i get some inflation up here in this bitch."
- StewMeat, on 10/30/2008, -3/+9The "monetary reform" plan prepared at Jekyll Island was to be presented to Congress as the completed work of the National Monetary Commission. It was imperative that the real authors of the bill remain hidden. So great was popular resentment against bankers since the Panic of 1907 that no Congressman would dare to vote for a bill bearing the Wall Street taint, no matter who had contributed to his campaign expenses. The Jekyll Island plan was a central bank plan, and in this country there was a long tradition of struggle against inflicting a central bank on the American people. It had begun with Thomas Jefferson’s fight against Alexander Hamilton’s scheme for the First Bank of the United States, backed by James Rothschild. It had continued with President Andrew Jackson’s successful war against Alexander Hamilton’s scheme for the Second Bank of the United States, in which Nicholas Biddle was acting as the agent for James Rothschild of Paris. The result of that struggle was the creation of the Independent Sub-Treasury System, which supposedly had served to keep the funds of the United States out of the hands of the financiers. A study of the panics of 1873, 1893, and 1907 indicates that these panics were the result of the international bankers’ operations in London. The public was demanding in 1908 that Congress enact legislation to prevent the recurrence of artificially induced money panics. Such monetary reform now seemed inevitable. It was to head off and control such reform that the National Monetary Commission had been set up with Nelson Aldrich at its head, since he was majority leader of the Senate.
The main problem, as Paul Warburg informed his colleagues, was to avoid the name "Central Bank". For that reason, he had decided upon the designation of "Federal Reserve System". This would deceive the people into thinking it was not a central bank. However, the Jekyll Island plan would be a central bank plan, fulfilling the main functions of a central bank; it would be owned by private individuals who would profit from ownership of shares. As a bank of issue, it would control the nation’s money and credit.
http://www.apfn.org/apfn/reserve.htm
and the best video around on the scam that is the federal reserve:
http://video.google.com/videoplay?docid=-515319560 ...
We must get rid of the FED!! - jjmckay, on 10/30/2008, -1/+7sulthernao is correct. Bernanke knows that if the rate returns to normality, the economy will collapse if he does that. They are trying to pump money into the economy with borrowed dollars. Think of it like an addiction. At first it felt good. Now they do it just to keep the pain away. Its very hard to get off the drug because there is a massive bureaucracy that upholds this status quo. There are many self serving interests that don't want it to end, and much of that is in the government including congress's addiction to spending so they can be re-elected.
Much as I don't like the Federal Reserve system, this current situation is not entirely their fault. That's as much the fault of the unprecedented spending of George Bush, his administration and Congress. But you can't expect a bull in a china shop to not break everything eventually.
An economy based off of debt is not capitalism! - Jem7vwh, on 10/30/2008, -0/+6How does a Single white male go about getting these loan rates?
- Hetman, on 10/30/2008, -0/+6But you are missing the whole point of digg. If you had to be an expert in your field to be able to post a certian comment, then digg would have like a handfull full of professors and no one else on it.
- y0y0howsdajell0, on 10/30/2008, -0/+5I really wish people read Paul Johnson. In his chapter on the causes on the great depression, he says that one of the main reasons the Depression actually occurred was because of artificially regulating interests rates. We have no clue as to if capitalism actually works, we've had FAR too much regulation to see!
- ColonelJessup, on 10/30/2008, -21/+26Here we go again with the digg.com economic professors........................
- GumshoeMike, on 10/30/2008, -0/+5And let me help explain the above explanation: Too low interest rates helped fuel the housing boom that just imploded, but now that it imploded and took the stock market down with it, very low interest rates are seen as a legit way to free up money and spur investing.
So, a very low fed interest rate is bad it fuels speculation on a bubble run-up and good when it encourages investing in a recession. At least that's the theory.
Deciding how to use this weapon properly is the clincher. And Greenspan just admitted he made a fundamental mistake in his assumptions about how banks would/should naturally protect themselves. Guess not. - youareretarded, on 10/30/2008, -0/+5I'm no expert but if lowering interest rates helped get us into this mess then why continue that?
The economy is trying to correct itself and the feds keep prolonging the inevitable which will make the eventual outcome even more devastating! - disparue, on 10/30/2008, -0/+5This was more common with the Yen due to efforts by the Bank of Japan to stabilize their exchange rate in regards to other major currencies (i.e. hold the value of the Yen down in regards to the U.S. dollar). This isn't very likely the way the money market currently is due to the instability in exchange rates.
http://en.wikipedia.org/wiki/Carry_trade#Currency - inactive, on 10/30/2008, -4/+9BOTH MCCAIN and OBAMA lack the COURAGE and the INTEGRITY to stand up for the fed.
GO 3RD PARTY - buddyw, on 10/30/2008, -0/+5A Greenspan solution to a Greenspan problem.
- inactive, on 10/30/2008, -1/+6Allan Greenspan is the ultimate cause of this current mess.
- k3rfuffl3, on 10/30/2008, -1/+5Japan didn't do any bail outs. At least not immediately.
- jased30, on 10/30/2008, -0/+4Inflation rate 6-10% + interest rate 1% = negative interest rates = SUPER INFLATION.
- xienze, on 10/30/2008, -0/+4The Democrats don't plan on doing anything different. Remember who was overwhelmingly in favor of the bailout bill...
Politicians are latching onto this crisis and painting it as "we don't want people to lose their homes!" In reality, what needs to happen is to allow these artificially inflated housing prices to come crashing down, but that doesn't play well in an election year. So both sides don't want to be the party that "made thousands of families homeless", and they play it safe by supporting bailouts.
Oh, and to correct your statement:
"Who's been borrowing hundreds of billions of dollars from foreign governments for the last 8 years? "
It's been going on for a lot longer than eight years... - drmangrum, on 10/30/2008, -0/+4I wonder if they think the best way to put out a fire is throw gasoline on it. The fed is getting retarded.
- ostracize, on 10/30/2008, -1/+5Cut the rate further? Hey why not? "In the long-run we're all dead".
- redgiemental, on 10/30/2008, -0/+4Businesses should really not be reliant on loans to simply remain standing. This a sorry state of affairs it really is.
The Federal Reserve needs shut down and we need to stop borrowing so much damn money! - javin666, on 10/30/2008, -1/+5Then why are mortgage rates still around 5.5?
- DirtyVicar, on 10/30/2008, -1/+5It's the banks that get these incredible rates with the Fed. For you and me, they'll continue shafting us with 5%. Another way for the banks to profit! I guess they could compete... oh wait, JP Morgan's buying up everything.
- inactive, on 10/30/2008, -1/+5Haha, you are Federal Reserve material
Send in your application today! - falstaff, on 10/30/2008, -0/+4The article is about short-term fed-to-bank loans. Even if banks could get long-term loans at 1%, they would still have to factor in risk and profit markups.
- 955701, on 10/30/2008, -0/+4"Is there any good argument that the Feds actions are justified in the long run?"
Sure! It delays the pain for a long time, given the Feds time to run. - thegreenspanput, on 10/30/2008, -0/+4and it did nothing. The structure of production was stretched.
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