Bowyer On Bernanke’s Pretend Rate Cut

The thing about Fed Chairman Ben Bernanke is that he does things in such a complex convoluted manner that few traders realize what he is or isn't up to. Hell, many economists don't realize what he is up to.

At least, Jerry Bowyer gets that today's Fed Funds rate cut is a fake Fed cut:

Today’s rate cut was late and small. Really, the cut was not actually a cut at all. Bernanke had already been pumping enough money into the system to lower the rate at least to 1.5%. What changed today is that it was made official. We didn’t get more money today – we got an announcement of what had already been happening...

But, notice that even Bowyer doesn't discuss the extraordinary power to pump money that Bernanke now has because of the Fed's new ability to pay interest on reserves left at the Fed.