money.sage.com[at]gmail.com wrote:
- quote -

You are all wet. The *discount rate* is the rate that the Fed controls
absolutely. The fed funds rate is set by the market. The Fed can
influence it by printing more money (or promising to), but it does not have
fundamental control of it.

Xho

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On Aug 16, 6:48 am, rick++ <rick...[at]hotmail.com> wrote:
- quote -

I'd say the tremendous financial damange was caused by the financial
instituations and the fed is telling them they have to take their
medicine this time. Now it hurts that the innocent will be knocked
down along with the guilty -- but I'd say the guilty needs to get hit
badly in order to keep excesses like this from happening again soon.
Otherwise, what's the moral of the story? Do anything you want to get
ahead -- you'll get bailed out.

On Aug 16, 8:23 am, Beliavsky <beliav...[at]aol.com> wrote:
- quote -

with a whiff of credit risk have skyrocketed (take a look at CP). For
now, this is a technical move to keep things moving, but if the Fed
wants to ease, they'll let you know. It may come to that. Wait and
see what happens when a lot of these levered trades unwind, including
the infamous Yen carry trade (take a look at the JPY over the past few
days). As of this writing, the stock market hasn't even reached the
official definition of a correction (we may get there today).
Historically, this is the slowest time of the year. Most of the big
market players are on vacation. It will get slower over the next two
weeks. If the markets don't normalize (meaning imbalances smooth out,
not lower volatility) you get an ease at the September meeting
(probably 50bp)

The loan market can trump the Fed by setting its own rates.
Sadly the Fed is incrediably out of step with the market this
month and causing tremendous financial damage.

On Aug 16, 8:06 am, money.sage....[at]gmail.com wrote:
- quote -

Since 1994, the Federal Reserve has always announced changes in target
Fed Funds, usually at scheduled meetings of the FOMC and in
emergencies between meeting. I am sure that if the Fed were to change
its operating procedure, it would say so. Ben Bernanke, the current
Fed chief, has long advocated central bank transparency.

Has the Fed Already Lowered Interest Rates?

http://money-sage.com

We note straws in the wind which indicate that the Fed may already
have lowered interest rates. While there has been no official
announcement, we note with keen interest that yesterday afternoon Fed
funds traded at 4.62%, more than half a point BELOW the official funds
target rate of 5.25% In addition, the yield on the 30 day T-bill is
now trading more than 1 full point BELOW the official funds rate.
The Fed has complete control over the overnight rate. In fact, Fed
funds is the one rate it does absolutely control. Late last week, when
banks panicked and drove the funds rate up to 6%, the Fed intervened
IMMEDIATELY, driving it back down to the official 5.25% rate.
If the funds rate does not return to 5.25% today, we will infer that
the Fed HAS ACTUALLY CUT RATES, AND BY A SIGNIFICANT AMOUNT (quarter
point moves are typical; half point moves are somewhat unusual, except
in serious situations).
It is also extremely difficult for the Fed to hold the Funds rate a
full point above the 30-day rate. Nor is there any reason they should
wish to do so, since the signal the bond market is giving is now
UNMISTAKABLE to even the most wilfully OBTUSE AT THE FED. The bond
market is ordering the FED to cut, cut, cut.