The Fed DID NOT cut the Fed funds rate(by Calvin Bear)

And don't misunderstand its meaning either. The Fed DID NOT cut the Fed funds rate - which remains for the moment at 5.25% The use of the phrase 'discount rate' is also in need of surgical clarification and description. Therate the Fed charges to select banks TO BORROW MONEY is what is at thismoment being called 'the discount rate.' And this rate has gone down afull 1% from 6.75 to 5.75. If you really understand the effectof all of this you would come to the realisation that firstly it raisesthe scope for the Fed to bring in A RISE IN THE FED FUNDS RATE of atleast another .25% in the mid-term and maybe even .5%. And secondly,all it has done is ADD to the problem of errant and easy lending bydecreasing the current marginal cost of liquidity to a particular groupof banks. Without expanding on the possible lateral effects ofthis step the Fed has taken, it needs to be pointed out that whathappened is not the same thing at all as the Fed acting on the discountbond rate ie., the money market leading benchmark interest. I don'twish to underscore this any further because I am myself a propenent ofCentral Bank's ability to use 'constructive ambiguity' in its choice ofphrasing to influence the market. However what the Fed did not just doin any shape or form was cut the discount rate, despite the manner itwhich its actions have been widely reported.' The consequencesof those who will persist in their ignorance about what is currentlygoing on will be that they are bound to lose money if they believeinterest rates will do anything other than go up from here. Calvin J. Bear