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The Zero Bound

Wednesday, December 17, 2008, 10:48 AM
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Wednesday, December 17, 2008

This report looks at the latest move by the Fed to drop interest rates to zero and to print massive amounts of money as part of a quantitative easing effort. It looks at the most recent Fed statement that accompanied the rate decision in some detail and closes with an exploration of what this could mean to the dollar (hint: not good) and our financial future.  I offer my view on the dollar, stocks, bonds, gold, and real estate.

Welcome to a brand new world. Today the central bank, stewarding the world’s reserve currency, took a step so bold and so fraught with danger that it is difficult to envision all the possible ramifications. The US now has an official interest rate of zero and a strongly worded promise from the Fed that monetary printing (a.k.a. “quantitative easing”) will now begin in earnest.

 

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