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  • Time for Global Coordinated Easing [View article]
    The FED is handing out money left and right and it's not helping. Small changes in the interest charged won't make a bit of difference economically. The banks are technically bankrupt and are only staying afloat by borrowing from the FED. See FED data:

    research.stlouisfed.or...

    When you're a bank and you can only meet your reserves by borrowing them from the FED and you don't know if anyone you lend to will go under tomorrow you tend to not issue any long term loans because one mistake will put you under too.

    Lowering rates to near zero won't help recapitalize banks, therefore it won't provide banks any incentives big enough to stimulate the commercial lending that the economy "needs". That's why the Japanese economy is still no better off than it was 18 years ago despite years and years of near-zero rates.

    Until bank reserve capital is wholly owned and not borrowed from the FED, the banks hands are tied.

    Lowering rates to stimulate the economy won't help. It truly is different this time.
    Oct 07 10:41 am |Rating: 0 0
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