Friday, February 19, 2010
The discount rate should be zero!
There's no reason to have a penalty attached to the discount rate if its intended function is to ensure the integrity of the payments system at the margin. Banks are quasi-public entities that fund themselves with taxpayer guaranteed deposits and their assets are regulated. Penalizing banks for borrowing at the discount window under that institutional structure makes no sense.
The only reason the Fed moved the rate up is because it caved in to the pressure of critics who say that it needs to "exit" from all the "stimulus" it has provided. What a joke.
I don't know who is more wimpy...Obama or Bernanke.
Wimps at the controls.
Dick Cheney for president! "Deficits don't matter!" You go, Dick!