The Numbers Confirm – We’re Turning into Japan

By Chuck Butler

I was looking at Bloomie yesterday, and I noticed something that’s really interesting. The Fed Funds rate is 1/16th right now.

But wait! Didn't the Fed cut the Fed Funds rate to 1% at the last meeting?

Yes, they did, but the people in the trenches are trading Fed Funds to each other at 1/16th. Does that tell you something? It tells me that the Fed is really will cut rates to 0% - as I’ve been saying. These daily transactions wouldn't be trading this low, unless rates were going there! Bernanke-san is transforming our economy into Japan.

Let me explain. I believe that the U.S. is following Japan and Japan's leaders in how they dealt with the decade of economic mess.

If you go back to the mid-90's you'll find the Japanese economy circling the bowl. The Japanese government and central bank issued stimulus package after stimulus package, and built huge amounts of government debt. They also cut interest rates to zero.

Now, ask yourself: What central bank does that remind you of in 2008? I’ll give you one guess, but I’ll doubt you’ll need it. (Hint: It’s run by Ben Bernanke.)

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