Fed Slashes U.S. Interest Rate To Basically Zero
Wasn't the Fed supposed to cut rates in half today, from 1 percent to 0.5 percent? Well, that wasn't good enough, for this failed economy and economic system. So now it's "near zero," which means "zero." Just like Japan tried for years and years, to no effect! The Federal Reserve Bank is now out of "traditional ammunition," according to almost-president Barack Obama, and your government is now printing money at an insane pace, and then banks are taking this money and immediately buying U.S. Treasury bonds, because nothing else is safe, and that is pretty much the end of this particular feedback loop.
Here's something kind of funny: This current economic collapse can be largely traced back to the 2003-2004 1% Fed Rate era that fueled the housing boom by making absurdly inflated real estate prices "affordable" because these interest rates -- both fixed and the evil adjustable ones -- hadn't been so low in half a century.
While it was sloppy/greedy "stated income" no-doc teaser-rate reverse-equity 105% loans that enabled Juan Drywallhanger and his old lady, Amber Asstattoo, to "buy" a 2,800-square-foot stucco monstrosity on a 3,000-square-foot lot in the Adobe Falls development behind the Sunburst Towne Center's (now closed) Bennigan's and Linens 'n Things in the first place, it was the artificially cheap borrowing costs that made the option-ARM introductory payments on a $579,000 "Tuscan inspired" vulgarity briefly plausible for people making $40,000 per year and already buried in credit-card and SUV debt.
So, now that grand era can return again! Except for the loan part, as banks are not using any of this bailout money for, uh, lending.
Fed Cuts Benchmark Rate to Near Zero [NYT]
Fed Cuts Rate to Zero-0.25%, Will Use All Tools (Update1) [Bloomberg]