FED Prints Money to Ease World Credit Crunch

The fallout from the sub-prime crisis continues.

“Helicopter Ben” Bernanke, so-called because of his statement years ago that the Fed should throw money out of helicopters to prevent recession, is living up to his name.

Today the FED announced a new method to lower world interest rates, of interest here at home because most ARMs adjust to the LIBOR, London Inter Bank Overnight Rate. Always with an ear to the stock market, this is at least partly in response to the Dow dive of Friday indicating the money guys do not feel the Fed 1/4 point lowering was sufficient.

This motive was denied off the record.

Though the Fed has been lowering rates, mortgage rates in the U.S. have not declined as much, as the world market for money is set in London, and adjustable rate mortgages adjust with the LIBOR rate.

The new move is a way to pump money to the European Central Bank and the national bank of Switzerland, though the Fed stated it was in discussions with the equivalent institutions in Canada and Britain.

If it works, the LIBOR will go down, and U. S. mortgage rates will follow suit.

If it does not, Ben will find more ways to pump out currency and liquidity.

Inflation is sure to follow.