♠ Posted by Emmanuel in Casino Capitalism at 12/16/2008 07:32:00 PMB-B-B-Bennie of the Feds is unparalleled in his disregard for the value of the dollar, dropping the Federal Funds rate to a range of 0.00 to 0.25%. The market was expecting a 50 basis point cut to 0.50%, but he has gone "all in." Holders of dollars, including yours truly (unfortunately), are screwed by the unprecedented money creation now being encouraged by the Fed. Unbelievably, the policy rate for the US dollar is now below the Japanese yen's. For a country fond of citing other countries for waging competitive devaluation, the US seems to be engaging in a lot of it at this moment. Some immediate thoughts:
- There is no guarantee that this latest helicopter drop will work;
- Having lowered the FF rate to 0.00 to 0.25%, Bernanke has run out of rate cuts. It really is "game over";
- If things don't turn around, this policy instrument is exhausted.