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Former hedge fund manager Bruce Krasting on the options available to the Federal Reserve to help boost the economy.
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According to Citigroup market expectations for another move by the Fed rose a record nine -- 9% in August but.
We have somebody who says don't expect any additional money pretty the Fed.
Has another device you can deploy that could be more effective Bruce cresting is a former hedge fund manager and a good friend of -- good to see an accurate and -- they all right let's let's say first of all what the Fed.
Sort of telegraphed they were going to do this is based.
On the minutes from the July 731 meeting if we could put that up on the screen.
Many members judged the additional monetary accommodation would likely be warranted fairly soon.
And -- incoming information information pointed to a substantial and sustainable strengthening of the pace of the economical recovery well as we know now.
The economy has not strengthen at all in fact it's done just the opposite it it points to getting worse getting weaker so doesn't that mean it's inevitable the Fed is gonna do something.
Yeah I think director 99%.
He must have something in this week I think -- pregnant.
So what is he gonna do how is it what -- using gonna deliver.
I think three options she could extend deserve language for another two years.
He can do a substantial quantitative easing and -- L sap large scale asset purchase or he can tinker around.
We the interest that is paid on excess reserves of about OK let's just talk about the second 11 because you said he's gonna have to if he prints money.
He can't credit credit totaling 200 billion really he's got to print some like 60800.
Billion.
To make it it it impact the market right right yeah be a judge if he came in -- -- half a loaf on acuity.
In my opinion so either we do something in the neighborhood of a hundred billion dollars a month to the next six -- -- 66 months or.
Some other program if he says -- I'm going to do 200 billion over the next six months -- people will say goodbye.
What what should he do.
-- do you think that a a big printing of 800 billion dollars so far.
All of that money pretty hasn't done anything in order stimulate the economy to cut economic growth is going down.
I'm on record of saying that enough is enough of -- true monetary policy.
But that's a relevant question is what's the Fed -- -- do because I don't have much to say about it.
Any answers I think that there will be a third option that comes out it extending the language is not going to accomplish anything.
And I do think he can push the string a -- if he does change the interest rate and on excess reserves.
Either down fifteen okay this is the.
Overnight deposit rate your -- other people of come on the show Wayne Angell former fed official said.
That all let does is encourage banks not to land because it gives them a little bit of money not a lot but 25 basis points.
To hold the money with the Federal Reserve if if you lowered that rate a little bit it might it might -- them a bit to get that money to get.
And in order to change things the Fed may force the banks to push this money into the system.
And then by that they would move interest rates slightly to negative.
Level now we have one indication that that might be exactly what Ben Bernanke is gonna do because John hills and wrath of the Wall Street Journal very often telegraphed what it is -- been -- got a very good relation with Ben Bernanke and he's been suggesting.
The Ben Bernanke might do this.
He hinted that it was it was on the table and I didn't agree review that that John Nielsen -- is.
He speaks for Ben.
And when Ben wants to there.
Introduce an idea to the financial community about things that might happen or what's been discussing uses John -- and -- to do it.
So there was a blog from -- -- over the weekend and his wording on this possibility of cutting the IO.
ER.
To some level were below where it is now may -- even as -- was zero which I don't think -- happen.
Is is gonna be discussed.
He made it also clear that there -- opposition to it in news it is for resisting that I think is going to be negotiated debated and may or may not happen.
I'm leaning in favor of it happen.
Bruce I'm getting a -- but -- used to trade currency for a living you made a lot of money doing that is there any currency in the world worth holding right now gulf.
So you think gold is a currency unlike Bernanke's -- wasn't.
I -- -- you know what has upside vs where you are gold probably is better than the dollar or the French origin -- for the Japanese yen.
I preferred over the Canadian dollar in the Norwegian -- too so yes Bruce -- -- as the only currency.
Thank you -- Bruce thank -- very.
