The Federal Reserve leaves rates unchanged... again

[tylerdee]

The Federal Reserve left its lending rates unchanged again on Wednesday in the central bank's latest announcement on monetary policy.

Full story

The thing that caught my eye was the quote:
"The Fed again led off its post-meeting statement in an upbeat fashion. "Information received since the Federal Open Market Committee met in September suggests that economic activity has continued to pick up," the statement said."

[DJ13]

1. " ...economic activity has continued to pick up," the statement said.

For the top 1% and Wall Street things are great.

They dont measure economic policy by how the rest of us are doing, so their data shows striking improvement.

[RUMMYisFROSTED]

2. Whistling in the dark, imo.

[Statistical]

3. Just as expected.

I doubt Fed will raise rates until unemployment peaks so both will likely happen around Q2 or early Q3 2010.

[h9socialist]

4. Declare the system moribund

With unemployment over 10% and interest rates down so far, I think we are nearing the time to declare capitalism mortally wounded. Only the stimulus has done any good, and it isn't nearly enough. Anyone who hasn't seen Michael Moore's latest movie needs to see it now . . . Then dust off your copies of books by Michael Harrington.

[RM33]

5. Reply: The Federal Reserve leaves rates unchanged... again

Interest will change based on market forces. At the moment, T Bills are a good investment. So, the Feds can keep interest rates low. But, if the market finds better investment deals elsewhere, then, the money will follow.

If other countries get out of their recessions and start raising interest rates the US dollar will be invested there. At that point, investors will invest in foriegn debt. At that point the Feds will have no choice but to raise rates.

[A HERETIC I AM]

7. Define "good investment" in this context..

because the yield on T-Bills is crap right now, so from an investment (meaning "expected total return") perspective, they are hardly "good". What they are is safe.

The longest term Treasury Bill is only yielding .30% (twelve month paper) and that means in real terms, that if you bought a $1000.00 face value T-Bill tomorrow morning (Monday, 11/9) at the open, you'll realize exactly three dollars in gains over the course of 12 months. The yield on 90 day paper, if rolled out for 12 months at the current quote would net you fifty cents. It would be just slightly more if you reinvested the interest earned on maturity every 3 months.

But, if the market finds better investment deals elsewhere, then, the money will follow.

The fact is, the market has found such better deals, hence the rise in commodities and the market as a whole. The primary reason Treasury paper is currently at a long term low yield is because US Government debt paper has historically been, and continues to be viewed as an extraordinarily safe place to put money in difficult times. The Ten Year Benchmark has not been this low for this long since the 1960's

[notesdev]

6. Of course

They aren't going to touch rates for a long time. They do and it's game over at the Wall Street casino.

[sendero]

8. Exactly..

... the transfer of wealth from savers to bankers must continue.