is, in shorthand, the rate banks charge each other for short term loans. Yesterday, the Federal Reserve lowered it from 1.5% to 1%

It Could be that Zero Is Not Out of the Question

A growing number of analysts now predict that the economy is so weak that the Fed will have to reduce its official target to zero if it wants to jumpstart the stalled economy.

Japan’s central bank reduced its benchmark interest rate to zero for five years, from 2001 to 2006. It did so mainly to combat a particularly persistent case of deflation, a broad-based decline in consumer prices, and to revive economic growth.



But, what do you do after that?

Technically, the bailout is/was a sub-zero rate from the govt.

What would also help the economy would be for consumer rates to drop drastically. A 1% interbank rate is meaningless to a person with a 23% credit card.

The economy will not restart until real estate prices finally bottom out.

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2008 E350 4matic / Black/Anthracite

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Gone but not Forgotten:
2001 E430 4matic, 206,xxx miles, Black/Charcoal
1995 E320, 252,xxx miles, Black/Grey
1989 260E, 223,00 miles, Black/Black

I believe Greenspan was asked during the last recession what would be done if the Fed Funds rate reached zero and more stimulus was needed. The response was that the fed and treasury could then pump "liquidity" into the market place.

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Terry Allison
N. Calif. & Boca Chica, Panama

09' E320 Bluetec 77k (USA)
09' Hyundai Santa Fe Diesel 48k (S.A.)

At that point the Fed will start PAYING banks to take their money, I guess.

Someone said on a program I was watching the other day that they might begin discounting rates on longer term loans. Whatever they decide to do, I hope it will help turn things around enough that we don't have a total economic collapse.

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" We have nothing to fear but the main stream media itself . . . ."- Adapted from Franklin D Roosevelt for the 21st century

OBK #55

1998 Lincoln Continental - Sold
Max 1984 300TD 285,000 miles - Sold
The Dee8gonator 1987 560SEC 196,000 miles - Sold
Orgasmatron - 2006 CLS500 90,000 miles
2002 C320 Wagon 122,000 miles
2016 AMG GTS 12,000 miles

It will be a controlled collapse, but definititely total.

Bank of Japan lowered its rates to 0.30%, and the U.S. will also have to head in that direction. We are going to be in this for years. But on the upside, gas is getting cheaper. The last I paid for premium was $2.88 -- 2 days after paying $3.08. At that rate of decline, we could possibly break through $2.00.

__________________
2008 E350 4matic / Black/Anthracite

------------------------------------
Gone but not Forgotten:
2001 E430 4matic, 206,xxx miles, Black/Charcoal
1995 E320, 252,xxx miles, Black/Grey
1989 260E, 223,00 miles, Black/Black

They can move it to .5% but the real danger is inflation hopefully they won't be resistant to move it up once the liquidity trickles in over the next 6 months.