I am thoroughly confused as everyone else. Does anybody think rather than focusing on inflation which the markets are currently screaming at us, the FED is actually concerned about deflation starting in 2008 into 2009. The credit bubble that just popped was to say the least gargantuan, the largest bubble in history, global in scope. The housing bubbles are now popping in the 30 to 40 countries where they existed, the run on Northern Rock in the UK was a defining moment in their housing bubble which is actually bigger than the USA’s. Greenspan recently went across the pond and told their central banks that they are basically f*&ked and should rethink further tightening. Once those economies begin to feel the negative impact of the housing bust the global economy will slow muting inflation and easing pressure on the dollar. The 50 bps cut won’t be felt in the economy until next year, right when the full effects of the popping global credit bubble will be felt around the globe. A large global credit contraction precedes a large consumer spending contraction. Thus the FED decision to lower the hammer in the Fed Funds rate. They know the front end will be volatile with the dollar getting hammered and oil and commodities going higher but they see the magnitude of the slowdown coming our way and are gambling that will mute inflation. Ben indicated the Great Depression could have been avoided if more liquidity had been available in the system. I am not saying this is right or wrong and there are plenty of holes here. I am just trying to make sense of the move our FED made that on the surface seems idiotic.