POLICY AT POINT OF MAXIMUM DEPARTURE - FLAPS AT FULL
0.0% to 0.25% as a target for funds, discount rate down to 0.5% and "excess" reserves at 0.25%
There is a case that zero is not a good rate of interest.
Dividend and credit rates are overwhelmingly attractive now.
[Remember the summertime and the ideologues who were issuing statements that the Fed needed to fight inflation? How ridiculous was that, in hindsight...]
THE RETURN OF THE CARRY TRADE - WE'RE ALL ON THE DOLLAR NOW?
The cost of hedging yen is nearly zero. The Euro is probably not far behind.
That means there is a huge reservoir of liquidity available for sensible risk, credit or otherwise.
Tuesday, December 16, 2008
Fed hits rock bottom
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