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Old 12-10-2008, 05:04 PM   #1
Mudanša
Avalon Senior Member
 
Join Date: Dec 2008
Location: Surrey, UK
Posts: 18
Default Fed to look at new ways to boost the supply and circulation of money

I thought I'd present this article I just found to you all.
Could those of you who are more knowledgeable in American Economic activities and economics in general please shed some light as to the effects of the following proposals?

The article is here:
http://news.uk.msn.com/Article.aspx?...entid=11749019

And the paragraphs that caught my attention are here:



SUB-ZERO CHILL

Investors fearful of deflation and riskier assets had scrambled to hand over cash to the U.S. Treasury in return for no interest at an auction on Tuesday, while interest rates on some Treasury bills rates fell below zero in the market.

When rates turn negative it shows investors are so concerned about the safety of assets that they are willing to effectively pay the U.S. government a fee to hold their cash.

With limited scope for further interest rate cuts from the present levels of 1 percent, economists are expecting the U.S. Federal Reserve to look at new ways to boost the supply and circulation of money to avoid a deflationary slump.

The Wall Street Journal reported on Wednesday that the Fed is considering issuing its own debt for the first time.

Fed officials have approached Congress about the move, which could include issuing bills or some other form of debt and would provide the central bank with more flexibility to tackle the financial crisis, the Journal said.
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