Skip to main content

Federal Reserve Action

The Federal Reserve was in a tight spot.

Congress and the Adminstration have given it absolutely no help with fiscal policy, running up deficits of unimaginable size. In the long run, deficits do matter.

Commercial paper was drying up. Only the best, most credit-worthy borrowers could get loans and mortgages.

So, they voted to cut rates - certainly more steeply than I expected. Oil jumped over $80 per barrel; gold shot through $700 per ounce and kept moving. The dollar fell against everything - settling even against the Canadian dollar! Six years ago - a Canadian dollar bought about 68 U.S. cents - now 100. Given the number of commodities that America now must import - wood pulp, copper, oil just to name a few, this creates inflation. So, the agency responsible for holding inflation in check just shook the genie out of the bottle.

They were in a tight spot.

Comments

Popular posts from this blog

Book Review: What Matters Now by Gary Hamel

Interview of Eric Schmidt by Gary Hamel at the MLab dinner tonight. Google's Marissa Mayer and Hal Varian also joined the open dialog about Google's culture and management style, from chaos to arrogance. The video just went up on YouTube. It's quite entertaining. (Photo credit: Wikipedia)Cover of The Future of ManagementMy list of must-read business writers continues to expand.Gary Hamel, however, author of What Matters Now, with the very long subtitle of How to Win in a World of Relentless Change, Ferocious Competition, and Unstoppable Innovation, has been on the list for quite some time.Continuing his thesis on the need for a new approach to management introduced in his prior book The Future of Management, Hamel calls for a complete rethinking of how enterprises are run.

Fundamental to his recommendation is that the practice of management is ossified in a command and control system that is now generations old and needs to be replaced with something that reflects an educat…

Add This Great Work to Your History Bookshelf

Team of Rivals: The Political Genius of Abraham Lincoln (Photo credit: Wikipedia)
The more I study American history, the more I realize how little I really know. I just completed Doris Kearns Goodwin’s Team of Rivals in which she explores the inter-workings, personalities and politics of the Lincoln administration.Every American schoolboy or schoolgirl knows that Lincoln presided over the most difficult period in American history save the George Washington era.Most know that he struggled with a series of second rate generals until Grant emerged. And that he was tragically assassinated just as the War Between the States ended. But how many of us know that many of the cabinet members opposed Lincoln in the primary?That many of those thought he was unqualified for the office?That one of them – Salmon Chase – actually tried to build support to oppose Lincoln in the 1864 election?Or that Lincoln’s opponent in 1864 was former General McClelland, who so famously failed to take advantage of his…

Is Too Little Sleep As Bad For Your Brain as Crack?

Sleep is essential to brain health. Dr. Nora Volkow just gave a speech titled Probing the Sleep-Deprived Human Brain. Dr. Volkow is the Director of the National Institute on Drug Abuse-part of the National Institute for Health She gave that speech at Radcliffe College which was reported in the Harvard Gazette.Dr. Volkow is an expert on the effects of addictive drugs on the brain, particularly the effects that cocaine has on the brain. She has found that cocaine disrupts dopamine transmission. Dopamine is a neurotransmitter that plays an essential role in brain function. In part, it is released by neurons to signal other neurons.Specifically, she found that that using cocaine resulted in brain cells releasing dopamine but being unable to receive it. She has found that lack of sleep can have the same effect on dopamine transmission. Here is a quote from her: “Yet lack of sleep itself produces some of the same effects that drugs do: It disrupts memory, inhibits alertness and can contrib…