The US Federal Reserve was forced to pump $41 billion into the financial system, the largest cash infusion since the September 2001 terrorist attacks, as fears of a fresh round of massive banking writedowns added to concerns on Wall Street and in London.
Economists said that a clear signal from the Fed that its quarter-point rate cut on Wednesday may be the last for some months added to investors’ fears that the central bank’s scope to fend off a severe US slowdown may be hampered by its nagging worries over inflation dangers.
The Fed is acting to protect the financial institutions before the mess we are in gets us more into trouble. And will continue to do so in the future. This is their responsibility. To keep the financial institutions out of trouble. At all costs for the sake of the overall economic and financial system.
The good news for the markets continues as liquidity is pumped into the system. The dollar and inflation, however, will become the next policy issue. For the time being, however, the viability of the financial system of the USA remains the top priority of the government.
More on http://www.peterdag.com/.
George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
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