The Fed Is Freaked Out about the Financial Markets -- Because It's Misreading the Situation

Townhall.com ^ | January 30, 2016 | Larry Kudlow

[zeestephen]

Kudlow forgot to mention his favorite cure-all for the USA economy.

Massive LEGAL immigration - so American companies have an infinite supply of cheap, docile, domestic labor.

[cherry]

the Fed is just people....well connected people protecting the big guys....

[cherry]

the Fed is just people....well connected people protecting the big guys....

[RipSawyer]

It is actually possible to do that but only if you are driving very slowly and you are VERY familiar with the road ahead which of course the fed is not.

[Moonman62]

My observation is that the Fed follows the instructions of Big Business and Big Government. What they want out of the Fed primarily is the suppression of wages and the smashing of the middle class. Everything else is secondary.

[Toddsterpatriot]

The problem is not lack of loan money. Banks can borrow from FED at zero rates.

Banks can borrow from the Fed at 0.75%.

[entropy12]

That is after a very recent increase of 0.25%.
0.75% is still record low rate.

Lending out at 4% or more after getting money from FED at 0.75% is record percentage profit.

Why does it take 7 years for the academics running FED that this record low rates method does not work?

[Toddsterpatriot]

0.75% is still record low rate.

I misspoke, the current rate is 1.0%

And 1.0% is not zero. If you had to guess, how much do you think banks are borrowing from the Fed at 1.0%?

Lending out at 4% or more after getting money from FED at 0.75% is record percentage profit.

Sounds like you've found a business opportunity. Let me know if you open your own bank.

[entropy12]

I have many bank stocks, too old to run a bank myself.

[Toddsterpatriot]

Good for you.

How much are the banks borrowing from the Fed?

[Zeneta]

How much are the banks borrowing from the Fed?

Virtually zero.

[Toddsterpatriot]

Virtually zero.

I guess entropy12 was wrong about “borrowing from the Fed to lend to customers”, as a viable business model.

[entropy12]

The FED supplying liquidity to banks has failed because they are applying the stimulus from the wrong end. It would have worked much better if the stimulus was directed towards business incentives and reduction of regulations.

On the stock traders board I frequent, my favorite analogy is giving enema from the wrong end will result in a painfully slow result.