Ra-donk’-alous
Posted: December 18th, 2008 | Author: Wayne Weddington | Filed under: Opinion | Tags: federal funds, interest rates, intervention, policy |
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Or Ree-dikk-you-leez. Same idea.
That is where the fed funds rate levels have descended. There is no other adjective that would apply. On December 17, the Federal Reserve lowered the fed funds rate to 0.00%. Thus the Fed has now made money available for free. Free money. The beneficiaries, banks, are lining up to apply… but they are not turning around and making the fire-sale available to businesses or to you, the borrower.
This is strong indication that the credit markets are still quite gummed up. Despite Congress’ valiant efforts to pump capital to the financial sector in order to stimulate lending (much of which is dutifully going out the back door by way of annual bonuses) the intended lubricant to the economic system has still not taken effect. One of the problems is that Congress forced the money upon the bank institutions but, “oops”, Congress did not actually require them to do anything with it. Opponents to regulation would point out that regulation though well-intended is often ill-executed and therefore ill-advised. Something should be done of course, but the current apparat has not had a great track record thus far.
- Wayne Weddington