Going on the record about Fed Funds Rate Cut
I am going on the record right now, Sept 17, 2007 @ 6:40am EDT.
This is based on the movement in gold, oil and weakness in the dollar (all related). The markets don't think we in the USA are going to take our medicine, that we are just going to print money to try to monetize yet another problem. The problem with lowering rates and printing money is competitive pressures from other central banks that are still raising interest rates or leaving them flat.
- 55% chance of no cut in Fed Funds but a cut in the discount rate.
This is based on the movement in gold, oil and weakness in the dollar (all related). The markets don't think we in the USA are going to take our medicine, that we are just going to print money to try to monetize yet another problem. The problem with lowering rates and printing money is competitive pressures from other central banks that are still raising interest rates or leaving them flat.
- 40% chance of a 25 bps cut in Fed Funds and the stock market sells off, "buy the rumor sell the news."
- 5% chance of a split vote by the FOMC and a 50 bps cut in Fed Funds, then we know for sure they think it is a crisis that could tip us over into a deflationary depression.
Labels: banking crisis, deflation, depression, fed funds, inflation
