How high will Microsoft fly? Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : How high will Microsoft fly?

MSFT 476.08

0.0%

Dec 17 3:59 PM EST

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: John F. Dowd who wrote (38261)	2/22/2000 4:18:00 AM
From: Dinesh	Read Replies (1) of 74651

John I don't understand where this conversation is leading to now, or what is the purpose of this all. YES, the Discount Rate is lower than the target Fed Funds rate. It usually is. The Funds Rate is market driven and fluctuates a ton, but the Fed indicates its target by jacking up (or down) the Discount Rate. You can see it daily in WSJ or Barrons or a lot of other places. The Fed doesn't fix the Funds Rate. Banks transact on Funds Rate. Discount Rate applies when a bank can't find reserves on the market. The Fed grants the loan but it also maintains an book titled "We Hate You", or "We Think You Are A Risky Business" or something like that -- banks don't want their name in that book. Particularly, if the Fed thinks the bank is arbitraging the Discount v/s Funds rates. The intent, once again, is never to rake in more from the banks, but only to make it costlier for the banks to support their loans portfolio. Thereby impacting the rates banks charge their customers. It's one way to control the total debt levels. Does it always work this way ? Who knows -- people have written a million books on the efficacy of this model. There are other methods too. Fed can change the margin requirements to curb or facilitate borrowing against stocks; the reserves requirements to throttle the supply of loans. Discount rate is usually to raise or lower the cost of the loans. I bet there are 63,000 other methods too. There are some very good books out there that discuss how money markets work. Stignum (sp?) is a good place. You can search on infoseek or wherever. Regards Dinesh

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next