First, a powerful warning from Art Cashin and friends – Unintended Consequences? – My old friend, Ron Insana, voiced some concerns about the potential for surprise in some of the mechanics that accompanied “liftoff”. Here’s some of what he wrote in a piece at CNBC.com:
First, not mentioned in the statement is the fact that, in addition to raising its target for the federal-funds rate, the central bank is raising the discount rate a quarter point to 1 percent. That is to be expected. However, the Fed is also raising the rate it pays
member banks to hold required reserves at the Fed, doubling that payment
to a half-point. This gives banks a much bigger incentive to earn a
half-point on their cash, risk free!
member banks to hold required reserves at the Fed, doubling that payment
to a half-point. This gives banks a much bigger incentive to earn a
half-point on their cash, risk free!
That is a major disincentive for banks to make further loans. And it comes at a time when the velocity of money, or the speed with which the
money supply turns over, is close to zero..."
money supply turns over, is close to zero..."
at http://kingworldnews.com/ominous-warning-about-what-is-about-to-accelerate-the-invisible-collapse/
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