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Posts Tagged With 'Fed'

Wall Street Missing the Boat on Fed and QE!

Shortly after you receive this issue of Money and Markets, Federal Reserve Board Chairman Ben Bernanke will give his landmark speech. The 10 a.m. EST address at the Kansas City Fed???s Economic Symposium in Jackson Hole, Wyoming is titled ???Near- and Long-Term Prospects for the U.S. Economy.???

I can???t recall a Fed speech so highly anticipated on Wall Street ???

Wall Street is practically salivating at the prospect that Bernanke will fire up the printing presses again. After all, it was his comment a year ago that ???the Committee is prepared to provide additional monetary accommodation through unconventional measures if it proves necessary??? at the 2010 Wyoming gathering that presaged the launch of QE2!

But here???s the cold, hard reality you???re not hearing on CNBC or reading in The Wall Street Journal: The Fed simply can NOT launch QE3.

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Has the Fed Painted Itself Into a Corner?

Last week???s Federal Reserve meeting ended with less than the usual fanfare in the financial press. It would appear editors are beginning to realize that ???Fed Does Nothing ??? Again??? doesn???t make for much of a headline.

With the Fed funds rate near zero for a year and a half now, the Fed has few places to go with monetary policy. The best it could muster last week was a decision to roll some proceeds from earlier purchases of mortgage-backed securities into the purchase of U.S. Treasury bonds.

The move to buy bonds is a technique to keep long-term interest rates low. The Fed can directly control very short-term interest rates (e.g., rates used for overnight lending to banks for liquidity purposes) but as a practical matter, longer-term rates that affect consumer loans are a function of bond market trading.

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Bloomberg vs. The Fed: What It Means for CDs, Savings Accounts, and Mortgages

Possibly the most underreported massively important financial news story occurring today pertains to the freedom of information lawsuit Bloomberg News Service has brought against the Federal Reserve.

The outcome of this case, which is currently in the U.S. appeals court, could have tremendous implications for certain banks, as well as the investors who hold CDs, money market accounts, and savings accounts at those certain banks, as well as people who have mortgages at those certain banks.

The??argument from??Bloomberg is that the Federal Reserve should reveal which banks and financial institutions would have failed if the Federal Reserve had not begun, in 2008, lending money to any financial firm that needed it, at low interest rates and with decidedly suspect collateral.

The Federal Reserve has been fighting hard to keep that information secret.

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