What happens when the Fed lowers interest rates like they did today?
Okay, so according to the latest New York Times Magazine, here is I think what happens: the Fed tells its thirteen or eleven or whatever regional feds to start sending XXTRA CHEAP 0.000009% OVERNIGHT LOAN offers to dealers of T-bonds. It takes the bonds as collateral. The dealers of bonds take the loans, knowing they can turn an easy buck lending the money out at slightly higher rates to other banks, who in turn lend it out at a slightly higher rate to a big investment bank, which in turn maybe uses it to see if it can turn a quick profit lending it out to a good the dip on Cisco stock or god knows what else… shit, don’t ask me. Whatever happens, money floods the system, or anyway, it is supposed to. The Fed doesn’t have to worry about going under because it reserves the right to print money. So, trickle trickle trickle, out flows the money. To the guy who already spent the bonus he made last year convincing BNP Paribas to buy into another basket of re-purposed subprime mortgages tha
