# 0% Interest - What will the Fed do now? **URL:** \ **Category:** Great Debates\ **Created:** [December 17, 2008, 1:29pm UTC](https://boards.straightdope.com/t/0-interest-what-will-the-fed-do-now/477551 "2008-12-17T13:29:42Z")\ **Posts on this page:** 14\ **Page:** 2
**Author:** ![Frylock](https://avatars.discourse-cdn.com/v4/letter/f/ce7236/32.png) [@Frylock](https://boards.straightdope.com/u/Frylock)\ **Post date:** [December 17, 2008, 8:07pm UTC](https://boards.straightdope.com/t/0-interest-what-will-the-fed-do-now/477551/21 "2008-12-17T20:07:37Z")
Jesus holy Mary and so on, you guys are scaring me. -FrL- ---
**Author:** ![smiling\_bandit](https://avatars.discourse-cdn.com/v4/letter/s/e9a140/32.png) [@smiling\_bandit](https://boards.straightdope.com/u/smiling_bandit)\ **Post date:** [December 17, 2008, 8:10pm UTC](https://boards.straightdope.com/t/0-interest-what-will-the-fed-do-now/477551/22 "2008-12-17T20:10:28Z")
Deflation! Good! More! Me Am Hungry For Less! ---
**Author:** ![Mosier](https://avatars.discourse-cdn.com/v4/letter/m/7ea924/32.png) [@Mosier](https://boards.straightdope.com/u/Mosier)\ **Post date:** [December 17, 2008, 8:15pm UTC](https://boards.straightdope.com/t/0-interest-what-will-the-fed-do-now/477551/23 "2008-12-17T20:15:01Z")
> [@smiling\_bandit](#): > > Deflation! Good! More! Me Am Hungry For Less! NOOOOO!!! Let the deflation come AFTER my house is paid off and I win the lottery. ---
**Author:** ![Ruminator](https://avatars.discourse-cdn.com/v4/letter/r/b9bd4f/32.png) [@Ruminator](https://boards.straightdope.com/u/Ruminator)\ **Post date:** [December 17, 2008, 8:23pm UTC](https://boards.straightdope.com/t/0-interest-what-will-the-fed-do-now/477551/24 "2008-12-17T20:23:24Z")
> [@Frylock](#): > > Jesus holy Mary and so on, you guys are scaring me. Information is your friend. Act wisely on it. The fear dissipates when you have a plan in your back pocket. Lots of people (including politicians) are burying their head in the sand. They will suffer the most. ---
**Author:** ![Dangerosa](https://avatars.discourse-cdn.com/v4/letter/d/22d042/32.png) [@Dangerosa](https://boards.straightdope.com/u/Dangerosa)\ **Post date:** [December 17, 2008, 8:24pm UTC](https://boards.straightdope.com/t/0-interest-what-will-the-fed-do-now/477551/25 "2008-12-17T20:24:02Z")
The other thing they’ll do is encourage spending - probably by accelerated depreciation schedules in tax. That’s what they always do - and it almost always works - though the unintended consequences can be a bitch. (You can trace the S&L scandal to accelerated depreciation). Moving money creates more money. ---
**Author:** ![Ruminator](https://avatars.discourse-cdn.com/v4/letter/r/b9bd4f/32.png) [@Ruminator](https://boards.straightdope.com/u/Ruminator)\ **Post date:** [December 17, 2008, 8:31pm UTC](https://boards.straightdope.com/t/0-interest-what-will-the-fed-do-now/477551/26 "2008-12-17T20:31:11Z")
> [@Smitty](#): > > I kind of figured it was something like that, but that means that T-Bills are ONLY being sold to people with huge amounts of money, right? Not necessarily. What about the investment vehicles in your 401k? Your pension funds. The endowments at your local universities, etc. They all have more than 100k and they need to park their money somewhere too. Their investment decisions trickle down and may affect you. Some folks who look at their 401k statements next quarter may be in for a shock. “WTF, how could I have lost money when my investment allocation was gov’t bonds?!?!?” ---
**Author:** ![Vimp](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/vimp/32/4186_2.png) [@Vimp](https://boards.straightdope.com/u/Vimp)\ **Post date:** [December 17, 2008, 8:44pm UTC](https://boards.straightdope.com/t/0-interest-what-will-the-fed-do-now/477551/27 "2008-12-17T20:44:21Z")
I think some form of nationalization of the banks is bound to occur. Right now, since the initial tranche of the bailout money to the banks has just resulted in the banks “hoarding” the money, and not putting it out to consumers in the form of loans, the public pressure on the Fed to do something - anything - to make the financial markets work is going to be huge. Right now I don’t think that anyone in the world has any faith in the US’s monetary policy. Any changes in interest rates or money supply is going to have only a marginal effect on the economy until we get some confidence that the powers that be have some idea of how to fix the whole ugly enchilada. I don’t have any clue where we go from here, and I don’t think Bernanke et al do either. And I’m really scared. ---
**Author:** ![Pleonast](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/pleonast/32/1183_2.png) [@Pleonast](https://boards.straightdope.com/u/Pleonast)\ **Post date:** [December 17, 2008, 8:57pm UTC](https://boards.straightdope.com/t/0-interest-what-will-the-fed-do-now/477551/28 "2008-12-17T20:57:54Z")
> [@KatiRoo](#): > > Right now I don’t think that anyone in the world has any faith in the US’s monetary policy. Any changes in interest rates or money supply is going to have only a marginal effect on the economy until we get some confidence that the powers that be have some idea of how to fix the whole ugly enchilada. Not quite, as demonstrated by the sustained appetite for US Treasury bonds. Of course, people were even buying California bonds–that takes some guts. ---
**Author:** ![Hellestal](https://avatars.discourse-cdn.com/v4/letter/h/3ab097/32.png) [@Hellestal](https://boards.straightdope.com/u/Hellestal)\ **Post date:** [December 18, 2008, 11:41am UTC](https://boards.straightdope.com/t/0-interest-what-will-the-fed-do-now/477551/29 "2008-12-18T11:41:46Z")
> [@Ruminator](#): > > Scenario #2 & #3 is interesting speculation but those “solutions” don’t solve our problem. They both “solve” one of our most fundamental problems, at least in the sense that banks aren’t lending. I would absolutely agree with **Pleonast** , though, that the Fed doesn’t have the infrastructure set up to lend directly. Much easier to nationalize and use channels that have already been built. Still, it was a cool idea to throw out there. This is from [one of those flaming lefties](http://firedoglake.com/2008/12/11/fed-screw-the-federal-debt-cap/), but the thought of a Fed Visa card cracked me up too much to not include it as an option. ---
**Author:** ![UltraVires](https://avatars.discourse-cdn.com/v4/letter/u/ecccb3/32.png) [@UltraVires](https://boards.straightdope.com/u/UltraVires)\ **Post date:** [December 19, 2008, 12:38am UTC](https://boards.straightdope.com/t/0-interest-what-will-the-fed-do-now/477551/30 "2008-12-19T00:38:50Z")
I don’t understand all of these “the rating on Treasury bonds will be lowered, causing investors to shy away, lowering the price, raising interest rates, etc.” If the U.S. Government defaults on our debt, you had better have seeds for your vegetable garden, and a good rifle to kill wild animals for food. All other economic data is worthless, as a U.S. default would make our dollar worthless and send Europe and Asia into a world-wide depression. ---
**Author:** ![Rune](https://avatars.discourse-cdn.com/v4/letter/r/e68b1a/32.png) [@Rune](https://boards.straightdope.com/u/Rune)\ **Post date:** [December 19, 2008, 1:10am UTC](https://boards.straightdope.com/t/0-interest-what-will-the-fed-do-now/477551/31 "2008-12-19T01:10:47Z")
> [@Ruminator](#): > > Read the first comment in this thead and you’ll have your answer: > [Reddit - Please wait for verification](http://www.reddit.com/r/business/comments/7ifde/can_someone_please_explain_why_any_investor_would) > > He mostly copied the text from a poster on this site but the ads look sorta NSFW to me so you may be better just going to the plagiarized version above. > [Bubba Army HQ – HQ](http://www.btls.com/joomla/forum/viewtopic.php?t=4556) > > If you have any futher questions, let us know! So T-bills is a flight to quality when all else is going to hell. But doesn’t "flight to quality” or “flight to safety” always end in land? Land isn’t going anywhere no matter the economy. But property and land prices are still plummeting. ---
**Author:** ![hawthorne](https://avatars.discourse-cdn.com/v4/letter/h/c89c15/32.png) [@hawthorne](https://boards.straightdope.com/u/hawthorne)\ **Post date:** [December 19, 2008, 12:26pm UTC](https://boards.straightdope.com/t/0-interest-what-will-the-fed-do-now/477551/32 "2008-12-19T12:26:23Z")
You’ve all seen [Bernanke’s 2002 speech](http://www.federalreserve.gov/BOARDDOCS/SPEECHES/2002/20021121/default.htm) on this, right? ---
**Author:** ![iamthewalrus\_3](https://avatars.discourse-cdn.com/v4/letter/i/258eb7/32.png) [@iamthewalrus\_3](https://boards.straightdope.com/u/iamthewalrus_3)\ **Post date:** [December 19, 2008, 7:00pm UTC](https://boards.straightdope.com/t/0-interest-what-will-the-fed-do-now/477551/33 "2008-12-19T19:00:52Z")
> [@Rune](#): > > So T-bills is a flight to quality when all else is going to hell. But doesn’t "flight to quality” or “flight to safety” always end in land? Land isn’t going anywhere no matter the economy. But property and land prices are still plummeting. Plummeting from historic highs in lots of places. Plus, remember that a substantial portion of real estate is bought on credit. Credit that’s not exactly flowing freely right now. ---
**Author:** ![Hellestal](https://avatars.discourse-cdn.com/v4/letter/h/3ab097/32.png) [@Hellestal](https://boards.straightdope.com/u/Hellestal)\ **Post date:** [December 21, 2008, 1:04pm UTC](https://boards.straightdope.com/t/0-interest-what-will-the-fed-do-now/477551/34 "2008-12-21T13:04:51Z")
> [@hawthorne](#): > > You’ve all seen [Bernanke’s 2002 speech](http://www.federalreserve.gov/BOARDDOCS/SPEECHES/2002/20021121/default.htm) on this, right? You know, I’d seen excerpts before (specifically the printing press comment, which gave some gold bugs heart trouble) but I’d never actually read the thing. Good to have that remedied. [Previous page](https://boards.straightdope.com/t/0-interest-what-will-the-fed-do-now/477551.md?page=1)