FED PR:

The Federal Open Market Committee decided today to establish a target range for the federal funds rate of 0 to 1/4 percent.

Since the Committee’s last meeting, labor market conditions have deteriorated, and the available data indicate that consumer spending, business investment, and industrial production have declined. Financial markets remain quite strained and credit conditions tight. Overall, the outlook for economic activity has weakened further.

The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability. In particular, the Committee anticipates that weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time.

The focus of the Committee’s policy going forward will be to support the functioning of financial markets and stimulate the economy through open market operations and other measures that sustain the size of the Federal Reserve’s balance sheet at a high level. As previously announced, over the next few quarters the Federal Reserve will purchase large quantities of agency debt and mortgage-backed securities to provide support to the mortgage and housing markets, and it stands ready to expand its purchases of agency debt and mortgage-backed securities as conditions warrant. The Committee is also evaluating the potential benefits of purchasing longer-term Treasury securities. Early next year, the Federal Reserve will also implement the Term Asset-Backed Securities Loan Facility to facilitate the extension of credit to households and small businesses. The Federal Reserve will continue to consider ways of using its balance sheet to further support credit markets and economic activity.

My comment: The FED is still trying to resurrect the last popped bubble of housing. If the FED can just print money and buy securities and everything will be wonderful then Zimbabwe would be the wealthiest country in the world. I guess from the FED’s perspective they really have no choice but to go all in and hope for the best. It is obvious the dollar does not like this and gold is reacting higher as this has is just straight money printing. This might be the beginning of the controlled dollar devaluation some have speculated about. I was watching idiot Cramer tonite and he is orgasmic over this as he states the FED will print "quadrillions and more quadrillions" if necessary. I think gold is going to do very well in 2009.

John Polomny
The Real Deal