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

To: Arthur Tang who wrote (257)	1/30/2001 8:06:11 AM
From: Arthur Tang	Read Replies (1) \| Respond to of 435

Federal reserve banks are in serious trouble from the news release of $5.05 billion shortages in member bank reserves. With the reserve at 8.5 times of over night discount loans, the member banks will have to stop loaning to their customers and suffer loan losses. This is all caused by the overnight discount rate increase, directly effecting the bank reserve. Every dollar loss is one dollar short on the bank reserve. But every dollar loss is $8.5 dollars borrowing power at Federal Reserve Banks lost. Without new borrowings, banks can not have a loose monetary policy to pump the economy. Greenspan has to lower the overnight discount rate to 4% now to rebuild the system and recapitalize the member banks. Any willy nilly and banking system in the United States will fail again as in the 1980s. This kind of Feds behavior speaks very poorly of a musician jamming a session; when a sour note of two no one cares.