If you will search the blog’s earlier posts, you will find several articles tracking the Fed Chairman’s thoughts and actions on dumping cash into a declining economy. He is at it again, this time with an injection of 40 billion in response to the market drop yesterday. The drop was as a result of an idea that the latest rate cut was too small. So, bring on the cash!

“The Fed said it would conduct two auctions next week where banks can bid for up to $40 billion in loans, money that they will have to bolster their own reserves. It marked the Fed’s biggest concentrated effort to inject liquidity into the banking system since the Sept. 11, 2001, terrorist attacks.

The hope is that the extra funds will spur increased lending on the part of the banks and combat a serious credit crunch that has made loans harder to obtain for many businesses and consumers.”

Here is a link to the article:
http://biz.yahoo.com/ap/071212/fed_credit_crunch.html?.v=14

Michael