Anchor ads are not supported on this page.

4S Ranch Allied Gardens Alpine Baja Balboa Park Bankers Hill Barrio Logan Bay Ho Bay Park Black Mountain Ranch Blossom Valley Bonita Bonsall Borrego Springs Boulevard Campo Cardiff-by-the-Sea Carlsbad Carmel Mountain Carmel Valley Chollas View Chula Vista City College City Heights Clairemont College Area Coronado CSU San Marcos Cuyamaca College Del Cerro Del Mar Descanso Downtown San Diego Eastlake East Village El Cajon Emerald Hills Encanto Encinitas Escondido Fallbrook Fletcher Hills Golden Hill Grant Hill Grantville Grossmont College Guatay Harbor Island Hillcrest Imperial Beach Imperial Valley Jacumba Jamacha-Lomita Jamul Julian Kearny Mesa Kensington La Jolla Lakeside La Mesa Lemon Grove Leucadia Liberty Station Lincoln Acres Lincoln Park Linda Vista Little Italy Logan Heights Mesa College Midway District MiraCosta College Miramar Miramar College Mira Mesa Mission Beach Mission Hills Mission Valley Mountain View Mount Hope Mount Laguna National City Nestor Normal Heights North Park Oak Park Ocean Beach Oceanside Old Town Otay Mesa Pacific Beach Pala Palomar College Palomar Mountain Paradise Hills Pauma Valley Pine Valley Point Loma Point Loma Nazarene Potrero Poway Rainbow Ramona Rancho Bernardo Rancho Penasquitos Rancho San Diego Rancho Santa Fe Rolando San Carlos San Marcos San Onofre Santa Ysabel Santee San Ysidro Scripps Ranch SDSU Serra Mesa Shelltown Shelter Island Sherman Heights Skyline Solana Beach Sorrento Valley Southcrest South Park Southwestern College Spring Valley Stockton Talmadge Temecula Tierrasanta Tijuana UCSD University City University Heights USD Valencia Park Valley Center Vista Warner Springs

Federal Reserve Essentially Admits It Is Fighting Depression, Not Simply Recession. It Lowers Interest Rate Target to Lowest Level Ever

The Federal Reserve today (Dec. 16), essentially admitted it is fighting a depression, not a recession. The central bank dropped the federal funds rate, the interest that banks charge each other, to a range of zero to 1/4th of 1 percent, an all-time low. It had been 1 percent. The stock market had been expecting a 1/2 percent cut. Like drunks on Skid Row reacting to five barrels of wine rolling in from heaven, the stock market rejoiced, as it almost always does when more liquidity is dumped into the system. And the Fed said it will take other steps to pour liquidity into the system beyond the amazingly low rates. Shortly after noon, the Dow Jones Industrial Average was up more than 300 points. Investors were ignoring the meaning of such a radical move: the Fed said that consumer spending, business investment and industrial production have declined and the overall economy has "weakened further." In fact, the consumer price index fell 1.7 percent in November to the lowest level since 1932. The Fed fears deflation, or depression, but won't say it. All this liquidity may create another bubble, but how does one know what kind of a bubble? Stocks? Real estate? If the Fed succeeds in thwarting deflation, very high inflation is almost certain to break out as a result of this liquidity binge.

Here's something you might be interested in.
Submit a free classified
or view all

Previous article

Reader 1st place writing contest winner gets kudos

2nd place winner not so much
Next Article

SDSU pres gets highest pay raise in state over last 15 years

Union-Tribune still stiffing downtown San Diego landlord?

The Federal Reserve today (Dec. 16), essentially admitted it is fighting a depression, not a recession. The central bank dropped the federal funds rate, the interest that banks charge each other, to a range of zero to 1/4th of 1 percent, an all-time low. It had been 1 percent. The stock market had been expecting a 1/2 percent cut. Like drunks on Skid Row reacting to five barrels of wine rolling in from heaven, the stock market rejoiced, as it almost always does when more liquidity is dumped into the system. And the Fed said it will take other steps to pour liquidity into the system beyond the amazingly low rates. Shortly after noon, the Dow Jones Industrial Average was up more than 300 points. Investors were ignoring the meaning of such a radical move: the Fed said that consumer spending, business investment and industrial production have declined and the overall economy has "weakened further." In fact, the consumer price index fell 1.7 percent in November to the lowest level since 1932. The Fed fears deflation, or depression, but won't say it. All this liquidity may create another bubble, but how does one know what kind of a bubble? Stocks? Real estate? If the Fed succeeds in thwarting deflation, very high inflation is almost certain to break out as a result of this liquidity binge.

Sponsored
Here's something you might be interested in.
Submit a free classified
or view all
Ask a Hipster — Advice you didn't know you needed Big Screen — Movie commentary Blurt — Music's inside track Booze News — San Diego spirits Classical Music — Immortal beauty Classifieds — Free and easy Cover Stories — Front-page features Drinks All Around — Bartenders' drink recipes Excerpts — Literary and spiritual excerpts Feast! — Food & drink reviews Feature Stories — Local news & stories Fishing Report — What’s getting hooked from ship and shore From the Archives — Spotlight on the past Golden Dreams — Talk of the town The Gonzo Report — Making the musical scene, or at least reporting from it Letters — Our inbox Movies@Home — Local movie buffs share favorites Movie Reviews — Our critics' picks and pans Musician Interviews — Up close with local artists Neighborhood News from Stringers — Hyperlocal news News Ticker — News & politics Obermeyer — San Diego politics illustrated Outdoors — Weekly changes in flora and fauna Overheard in San Diego — Eavesdropping illustrated Poetry — The old and the new Reader Travel — Travel section built by travelers Reading — The hunt for intellectuals Roam-O-Rama — SoCal's best hiking/biking trails San Diego Beer — Inside San Diego suds SD on the QT — Almost factual news Sheep and Goats — Places of worship Special Issues — The best of Street Style — San Diego streets have style Surf Diego — Real stories from those braving the waves Theater — On stage in San Diego this week Tin Fork — Silver spoon alternative Under the Radar — Matt Potter's undercover work Unforgettable — Long-ago San Diego Unreal Estate — San Diego's priciest pads Your Week — Daily event picks
4S Ranch Allied Gardens Alpine Baja Balboa Park Bankers Hill Barrio Logan Bay Ho Bay Park Black Mountain Ranch Blossom Valley Bonita Bonsall Borrego Springs Boulevard Campo Cardiff-by-the-Sea Carlsbad Carmel Mountain Carmel Valley Chollas View Chula Vista City College City Heights Clairemont College Area Coronado CSU San Marcos Cuyamaca College Del Cerro Del Mar Descanso Downtown San Diego Eastlake East Village El Cajon Emerald Hills Encanto Encinitas Escondido Fallbrook Fletcher Hills Golden Hill Grant Hill Grantville Grossmont College Guatay Harbor Island Hillcrest Imperial Beach Imperial Valley Jacumba Jamacha-Lomita Jamul Julian Kearny Mesa Kensington La Jolla Lakeside La Mesa Lemon Grove Leucadia Liberty Station Lincoln Acres Lincoln Park Linda Vista Little Italy Logan Heights Mesa College Midway District MiraCosta College Miramar Miramar College Mira Mesa Mission Beach Mission Hills Mission Valley Mountain View Mount Hope Mount Laguna National City Nestor Normal Heights North Park Oak Park Ocean Beach Oceanside Old Town Otay Mesa Pacific Beach Pala Palomar College Palomar Mountain Paradise Hills Pauma Valley Pine Valley Point Loma Point Loma Nazarene Potrero Poway Rainbow Ramona Rancho Bernardo Rancho Penasquitos Rancho San Diego Rancho Santa Fe Rolando San Carlos San Marcos San Onofre Santa Ysabel Santee San Ysidro Scripps Ranch SDSU Serra Mesa Shelltown Shelter Island Sherman Heights Skyline Solana Beach Sorrento Valley Southcrest South Park Southwestern College Spring Valley Stockton Talmadge Temecula Tierrasanta Tijuana UCSD University City University Heights USD Valencia Park Valley Center Vista Warner Springs
Close

Anchor ads are not supported on this page.