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.

Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (54164)	4/1/1999 4:11:00 PM
From: Freedom Fighter	Read Replies (1) \| Respond to of 132070

Mike, >>kailash, My feeling is the game is over for these types of Fed machinations. When the Funds rate is that far out of line with targets, the investors have seen the truth and they are not paying attention to the man behind the curtain. Short term, flooding the system with fiat money could bring rates down a tick or two, but they will pop back up unless the Fed continues to crank it out.<< What are the short term implications of cranking it out?

To: Knighty Tin who wrote (54164)	4/1/1999 4:49:00 PM
From: Peter Singleton	Read Replies (3) \| Respond to of 132070

Michael, I have a naive question, not really understanding how Fed funds work, and their implications. The Fed has been adding reserves almost daily for the past few months. According to Henry Volquardsen on the Currency thread, the Fed's adding and draining reserves to hit the Fed funds target are usually short-term, technical adjustments, and don't mean much. However, according to Jim Hopkins of the Kahuna thread (he's not a currency specialist, though Henry is), he's seen an uncanny correlation between the Fed's adding reserves and the market's performance that day (oh, I guess I should be more precise, the big index stocks <g>). So, what does it mean that the Fed has been injecting reserves almost daily? And, what does it mean when despite the Fed's adding reserves, the Fed funds rate is more than 50 basis points above their target? How does all this machinery work? Peter