Wednesday, March 18, 2009
Still think rates are set by the market?
In the words of Nobel Laureate economist, James Tobin, "Interest rates are a parameter set by the central bank." Period!! (My emphasis.)
The Fed said its wants rates down and guess what? They went down--big time!
(Keep shorting Treasuries, Jim Rogers! When you're broke hopefully we won't have to listen to you anymore.)
On a similar note...a central bank has infinite power to weaken its currency. I am not talking about the Fed, whose statement today carries zero implication for the dollar whatsoever. I am talking about the Swiss National Bank's statement last week, where it said that it would intervene to keep the Swiss franc down. Bet against this at your own risk. Go with it and, with patience, you'll make a lot of money!