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Strategies & Market Trends : Heinz Blasnik- Views You Can Use -- Ignore unavailable to you. Want to Upgrade?

To: Don Lloyd who wrote (2811)	6/28/2003 12:47:32 AM
From: GraceZ	Respond to of 4916

Over the FED's entire loosening cycle it has enabled banks to create new fractionally reserved loans for both individuals and businesses. Businesses? C&I has been steadily contracting for three years, every time I think it's bottomed it hits a new low. Business loan demand is non-existent. The money the Fed has created in the last three years is going into cash as is evident if you compare the currency portion of the money supply with the permanent creation over the past three years. Long interest rates are falling because people have made a dash into the safety of bonds from the stock market bidding them up and driving down rates. The lower long rates are forcing people into mortgage backed securities in an attempt to capture a higher yield which is driving down mortgage rates. The Fed is not setting these long rates, the market is.