Welcome to the wonderful world of ZERO interest

Helicopter Bernie is full filling his promise to throw money from Helicopters sometime soon I suppose even literally- in a ‘bold’ or rather more desperate move the FED cut interest de facto to Zero today, which is scary on one hand as it means that people can not earn any money in their pension plans other than to take risks which they should not do with the times ahead. On the other hand, they need to fight the upcoming depression but to allow Wall Street to pay double digit bonuses from taxpayers money is a wrong path. Unfortunately, no commoner will be able to borrow money at that rate, which would be the right thing to do, as banks do not create jobs and the government spending will be limited to the extend that though the money they print has no value and will just delay the effect, which is inevitable in a substantial and painful contraction.

Look at what happened from a distance and you will see that Wall Street did basically what Madoff made, only on a bigger scale. They produced paper profits with creating bubbles but that is by the same token the responsibility of the governments. The fact that faked money profits were paid out to some (mostly wall street but now as reality kicks in as with Madoff), taxpayers have to pay the bill or, more generally, the world economy has to suffer for that excessive greed. Things have to be downsized to reality – borrowing money is not a natural thing to do as some (Rothschilds) wants us to make believe. They washed our brains with the Hollywood machinery, which trains our social behavior with films and soaps and wants to make us believe that paying down mortgages and student loans and credit cards is the natural way to live – that is not a natural design at all. Slavery was once done with chains and punishment – now they work much more sophisticated with mortgage loans and fear you might lose your job. Actually, it’s a strange business banking — they take the money from your neighbour for a low interest they pay and borrow it to you for a much higher. Governments allow them to charge insane interest on credit cards – do not think government protects citizens interests that’s just the idea they sell basically they organize that a small group can screw the many. I think we should switch to Vulcanian philosophy as I learned recently from a ‘TV show’ the interest of the few have to stand back for the interest of the many’ – that’s a quote from Spock on Star Trek – we are living the opposite so far, which brings us all into this kind of mess.

Fed Cuts Key Interest Rate To Between Zero and 0.25%

The Federal Reserve has cut its target for a key interest rate to the lowest level on record and pledged to use “all available tools” to combat a severe financial crisis and prolonged recession.

The central bank says it reduced the federal funds rate, the interest that banks charge each other, to a range of zero to 0.25 percent.

Fed Rate Cut
CNBC.com

 


That is down from the 1 percent target rate in effect since the last meeting in October.

Federal Reserve Chairman Ben Bernanke and his colleagues also pledged to use “all available tools” as they struggle to contain a financial crisis that is the worst since the 1930s and a recession that is already the longest in a quarter-century.

With the Fed’s key rate now essentially zero, the central bank is moving into uncharted territory. Nonetheless, Fed Chairman Ben Bernanke has made it clear the Fed isn’t running out of ammunition to fight the worst financial crisis since the 1930s.

The Fed underscored its committment to use extraordinary measures, including using its balance sheet to support the credit markets.

The statement signaled the FOMC’s future intentions by saying circumstances “warrant” keeping fed funds low for “sometime.”

The Fed empoyed a similar telegraphing approach during the 2003 period when there were worries about inflation. That successfully managed the market’s expectations.

In terms of other measures, the Fed restated its intention to buy large quantities of GSE and MBS debt to lower mortgage rates, a plan it first mentioned more than three weeks ago.

The Fed, however, remained cautious about another unusual measure, which Bernanke first floated two weeks ago. The statement said the central bank was still “considering” buying long-term securities, which is also thought to be aimed at lowering borrowing costs by going around commerica banks.

President-elect Barack Obama said Tuesday the Fed is “running out of the traditional ammunition” to fight the recession and that it was critical for other branches government to “step up.” Obama, whose economic team is meeting Tuesday, is working on a “bold agenda” to spur an economic recovery.

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~ by behindthematrix on December 19, 2008.

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