So as long as the banks can repay the money the FED is essentially loaning them to float their operations, then everything will be hunky dory? That of course assumes the FED does that in a timely manner, and that the banks can repay the loans.
Enter the mortgage crisis
So if banks need borrowed liquidity to operate as a result of deliquent loans, and those loans continue to go bad, the borrowed money is virtually gone, right? Do the banks go under, or is that considered a bailout?
I view lowering rates as adding fuel to this fire. People need to be encouraged to curtail their spending to fit within what they can afford. Heresy! I know, saving money?!? Lowering rates may help banks, but once consumers are out of money and buried in hopeless debt, the economy will be toast anyway.
