Major Central Bank Intervention in the Current Global Liquidity Crisis

Friday, August 17, 2007 | 02:43 PM

Great chart, via Plexus Asset Management:

>


Fed_mechanism_3

Its so simple! How can this not work?

>


Source:
Why the Fed’s rate cut did not come as a surprise
Ryk de Klerk
Plexus Asset Management, August 17, 2007
http://investmentpostcards.wordpress.com/2007/08/17/stock-markets-how-deep-is-the-rabbit-hole/

Friday, August 17, 2007 | 02:43 PM | Permalink | Comments (61) | TrackBack (1)
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» The Quants Explain Disaster from Zmetro.com
Joe Nocera (Subscription): Back in 1998, that now infamous quant fund really did melt down, not only liquidating, but shaking the entire global financial system. Long-Term used complex computer models that failed to anticipate some severe once-in-a-lif... [Read More]

Tracked on Aug 18, 2007 6:35:21 AM

Comments

Perverse liquidity --> Inflationary pressure --> Diminished returns --> Increase risk taking/leverage in order to keep up with / overtake inflation --> breeds MORE inflation --> too much leverage makes the wrong bet --> game over --> taxpayer bailout

Rinse...10-20 years...Repeat.

Posted by: KP | Aug 17, 2007 2:52:56 PM

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