Moon Kil Woong

What Will the Fed Do Now That Rates Are at Zero?

No what helped bring down the mortgage rates was the fact that no one is buying and banks have a hoard of cash with nothing to do with it. The interest rates were all pointing to Zirp long before the Fed lowered to Zirp.

Likewise, the lst thing the fed should be promoting is quantitative easing. First the US has a massive deficit already. If Japan couldn't even afford stimulating itself out of 0% interest rate deflation what are the odds we can? If anything 0% inflation tends to lead to more deflation.

Just because bankers have a lot of free cash from bailouts and the Fed buying their somewhat solvent loans for cash (probably at a loss) doesn't mean they are going to share the wealth, increase loans, or buy multi-million mansions for themselves allowing the trickle down theory to work. Nope, giving bankers money is like giving gold to scrooge. It will never appear again in the light of day.

Face it helicopter Bernake is dumping money in the one place it does no one any good; his friends.