Behind the Fed's Rate Hike


Thursday’s discount rate hike by the Fed to 0.75 percent had little to do with any economic recovery in the US.

Bernanke and the other governors are worried about the lowering rate of participation of the primary and indirect buyers of treasury notes and bills due to lower yields. So the Fed raised the discount rate in order to prop up the return marginally in order to entice foreigners to continue to feast on our debt. The discount rate and prime rate generally move in tandem.

This could cost the taxpayers more if the Fed is going to pay a larger interest rate to the banks on reserves being held by the Fed for the bankrupt Wall Street banks.


Citigroup has sent out an announcement to its checking customers that beginning in April the bank can take up to seven days before it clears a check or allows you to remove funds from the account. This appears to be a defensive method of protecting the bank from a run on it.

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