Silicon Investor (SI) -- The First Internet Community

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.

Strategies & Market Trends : New US Economy Policy -- Ignore unavailable to you. Want to Upgrade?

To: Arthur Tang who wrote (223)	5/2/2000 8:26:00 AM
From: Arthur Tang	Read Replies (1) \| Respond to of 435

Feds' recent interest rate policy bought back 10% of national debt. Yesterday, Feds announced buy back of 153 billion dollars of debt, and expect to buy back another $47 billion today. However, it is a delicate task for the Feds. Over doing the buy back will in effect losening the monetary policy; while increasing the interest rate will tighten the cash reserve of member banks, forcing the banks to squeeze their customers for fees, other charges, etc. to pay the higher interest the Feds charge. Feds will see bank asset or book value to deposit ratio (currently 8-11.5%) decreasing in the near future. Feds probably will have to cut overnight discount rate soon to balance the member banks' earning power to Feds' interest payments. 5% overnight discount rate is the balance; the banks operated on that rate to make a profit.