Fed Readies for one of the boldest experiments in its 94-year history

[RedEarth]

Dec. 16 (Bloomberg) -- The Federal Reserve may today reduce its main interest rate to the lowest level on record and prepare for one of the boldest experiments in its 94-year history: using its balance sheet as the key tool for monetary policy.

The Fed’s Open Market Committee will probably cut the benchmark rate in half, to 0.5 percent, according to the median of 84 forecasts in a Bloomberg News survey. The central bank may also signal plans to channel credit to businesses and consumers by further enlarging its $2.26 trillion of assets.

Chairman Ben S. Bernanke plans new steps to combat the credit crunch and prevent the worst recession in a quarter century from turning into a depression. The danger is the Fed’s credibility could be hurt if policy makers don’t clearly communicate a new strategy of manipulating the supply of money, at a time when FOMC members have diverging views on the subject.

“We expect the FOMC to leave the policy outlook open- ended,” said Louis Crandall, chief economist at Wrightson ICAP LLC, the world’s largest broker of trades between banks, in Jersey City, New Jersey. “The FOMC may have no choice but to muddle along for a while longer” because “there is no sign that a consensus on a new approach has begun to emerge,” he said.

Investor speculation that the Fed will ease monetary policy today pushed yields on 10-year Treasury notes to the lowest since 1954. The dollar traded near a two-month low against the euro and was close to its weakest level in 13 years versus the yen.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aBYiNV2dvxxA&refer=home#

[endarkenment]

1. sniff sniff .... I smell f'ing disaster.

I really don't want the undemocratic institution of 'the fed' conducting any bold experiments.

[4dsc]

2. Heading to a depression are we....

A depression is nothing more than a long term recession.. And seeing no end in site for this recession I wonder when they will refer to it as a depression?? Probably right before the 2010 elections..

[CoffeeCat]

5. I think we're headed for obvious...

....glaring economic misery, and it will be an unmistakable downturn that no one will
be able to cover it up with funny statistics and outright denial.

The "Douglas Neidermeyer 'Remain-calm-all-is-well!' approach" won't cut it any more.

[Citizen Number 9]

3. It is sorta frightening, isn't it?

What, exactly, are the alternatives to this bold experiment?

[notesdev]

7. The best alternative of all

is getting rid of the primary cause of this mess, the Federal Reserve. I'd be a lot more comfortable with that than having the guys who caused the problem then denied that anything was wrong until the market crashed and banks went under left and right treat the national economy like some sort of lab experiment. They blew the biggest economic bubble they could because the media adulation over the fake economic growth it made them feel like movie stars. A less qualified group to deal with the problem now I could not imagine.

[Citizen Number 9]

8. If something malfunctions

you probably want to attempt to fix it before you completely trash it.

As far as I can see, things worked as they should have with the Fed, save the decision to keep rates so low for so long.

It's possible that they might have raised them had there been much of an outside push to do that. Raising rates is generally an unpopular move and aside from attempting to "blame" it on the Administration, Democrats would have been right up there complaining about it as an attack on the consumer.

Republicans wanted to keep the party going to deflect attention from the war.

No one likes to do the unpopular thing and not many politicians can survive concerted attacks from both sides, even if it was the right thing to do.

I think it's a perfect example of that happening.

[notesdev]

9. This exceeds the level of malfunction

and goes straight into being a vehicle for theft. Because of these guys, the taxpayer is on the hook for what, $8 trillion and rising? That's a mind-boggling number. It was never a good idea to put a banking cartel - and make no mistake, that is exactly what the Federal Reserve is - in charge of monetary policy.

[CoffeeCat]

4. Bloomberg news said, "depression."

Holy shit...for once, the media isn't covering up.

I can take anything---recession...depression...a really challenging psychiatric session (ha)--but what I can't
stand is the LIES.

I'm sick of the media telling us it's all sunshine and clear skies--while we're being hit with softball-sized hail.

Maybe they've finally realized that they can't hide the obvious truth, any longer.

Whatever the case, I hope we can all get down to business---so we can ride out this storm and work as a nation
to solve these paradigm-shifting problems.

You can't solve anything, when the media won't acknowledge that there's a problem. Maddening!

[sarcasmo]

6. If the Depression bench mark is 20-30 percent, I think we are in one in Michigan.

Almost ten percent on the books and if you ad people like myself who can't collect unemployment, or have falling off the unemployment payroll, then I too call it a Depression.