Fed Discount Rate Cut

From the blab..."The discount rate, or "window," is the interest rate charged to commercial banks and other depository institutions on loans they receive from the Fed's lending facility."

From the FED..."The Discount Window functions as a safety valve in relieving pressures in reserve markets; extensions of credit can help alleviate liquidity strains in a depository institution and in the banking system as a whole. It also helps ensure the basic stability of the payment system by supplying liquidity during times of systemic stress."

One slight problem...The FED is not loaning they are manufacturing money...Or monetizing assets...they are not loaning...

"In order to borrow from the New York Fed, an institution must have on file the necessary authorizing resolutions and agreements, as described in Operating Circular 10 as well as pre-approved eligible collateral."

There is no borrowing of someting that exists in the present...Anything that is being borrowed comes from the future...But since the future does not exist yet...there is nothing there to borrow yet...so all that is happening is the FED is creating new money in the present that has to be paid back in the future when it arrives...

If people are having trouble paying now or can't pay...they certainly won't be able to pay in the future...

The FED had the same system in place before and during the depression...

And when the Future arrived and the people couldn't pay...they were wiped out anyways...

"extensions of credit can help alleviate liquidity strains in a depository institution and in the banking system as a whole. It also helps ensure the basic stability of the payment system by supplying liquidity during times of systemic stress."

Works great when dealing with Christmas...But it's not going to do anything once the Global credit system reaches maximum potential.

It's about as much help as telling everyone to jump up before the elevator they are all trapped in that is falling to the basement reaches the basement.

But It can buy a little more time to put the finishing touches on whatever plans to manufacture a scapegoat are being implemented.

"Stock futures, Treasury prices surge as Fed cuts discount rate in effort to improve liquidity."

That was already planned to take place before the cut...To of course fool the observers into thinking that the cuts had the desired effect...That the FED is doing something...

Like firemen secretly starting fires to then put them out and save the day...

rates around the world will have to drop as well...Key problem...The Japanese discount rate dropped from .5% to .1% the last crisis 1997-2001...the asian meltdown...They are still at 0.1%...There is nowhere for them to go...you need massive volume to support a rate that low...lower than 0.1%...to lets say...0.05% or a 50% cut to the Japanese discount rate and you need twice the volume...

US consumers have to request commercial banks to manufacture twice the amount of money that they did 2001-present...

In 2001 the household debt to income ratio was 80%- 85%...now after the binge...it's at 110%...past 100% and consumers are forced to request less and less money to be manufactured...while prior to 100% they can and did request more and more money to be manufactured...been doing it for decades...But are basically at the end of the credit line.

There is no volume...and ultimately rates would have to go negative to obtain the required volume...But Banks operate like everything else...on profit...Paying consumers to request money creation so you can obtain an income will not work...

Lets say you earn a living creating money for consumers that request it's creation...like the banks do...Well if the yield from that operation is -5% and payday comes around and your paycheck is negative 500 dollars...meaning after two weeks of employment you owe 500 dollars...you are going to starve to death pretty quick.


If I have enough food to allow me and my family and one other person to survive a winter and there's me...my wife and two children...and 5 other people...

4 are going to die reguardless of how much I care...Socialism is not about commiting suicide...

Now lets say one of the people pulls a gun and takes control of the food supply and then sets enough aside for their survival and then rations out the rest until it runs out and we all die of starvation before the spring..but the government of the food supply lives...That is not socialism...

Just because someone mentions the word socialism...It doesn't mean they are a socialist or even know what socialism is...

When inflation really takes off...the division of labor will collapse and those without an income will have to live off savings...Like stashes of gold and silver...or stop paying all your bills...stop eating...etc...

People say...If they only had gold and siver in Zimbabwe...they would be doing ok...They did...It was all spent at the start to survive...the savings for a rainy day did not last until the rains eneded unfortunately...

and since Zimbabwe is dependant upon imports (like the USA is) any gold and silver that entered circulation...circulated right out of the country...and didn't come back...

The same will happen in the USA...