[emersonbiggins]

Found this nugget this morning; the Federal Reserve is applying window dressing to the discount window, presumably so it looks less like a loan shark's office abutting a used car lot.

$this->bbcode_second_pass_quote('', 'T')he Fed may lower the discount rate -- what it charges banks for short-term direct loans -- by a quarter-point more than the benchmark rate after Vice Chairman Donald Kohn and San Francisco Fed President Janet Yellen publicly expressed frustration that previous rate cuts haven't encouraged banks to lend to one another.
...

[mattduke]

Pul-lease!

[heroineworshipper]

Nifty dog walking SUV.

[evilgenius]

It is a good idea to forget 'moral hazard' and open up liquidity through the discount window, I think. The problem is I'll bet a half point at the discount window won't do it and the Fed doesn't yet realize that they had better nip this in the bud. I think they should drop the discount window by a full point and the Fed funds rate by only 25 bps. This is just my opinion, but we are where we are in part because the Fed has been too cautious, either because they wanted this and wouldn't kill the bubble with several half point rate rises or were too afraid of the impact that a slowdown would have had on the rich back when a slowdown would have been all that you would have gotten. People are talking depression now. The only way to stop a depression is to inflate. The only way to do that without risking a violent hyperinflationary counterswing is to act prudently and go just far enough and not any farther. they can keep the real economy in check by gong 25 bps on Fed funds. They can provide leverage to the institutions re: risk assoc w/borrowing by going a full point on the discount window. This would also send a message to the bond market not to get too exuberent and drive down bond yields so far that when things begin to settle rates will be stuck far too low, engendering hyperinflation again.