Following minutes from their December 11 meeting, the Federal Reserve have said the credit squeeze could result in a situation that will require substantial interest rate cuts. The Federal Reserve, the US equivalent of the Bank of England, cut rates for the third time to 4.25% on December 11 due to deteriorating credit markets.However, the [...]

More: Federal Reserve could make substantial rate cuts

Cuts by the Fed might have some temporary 'feel good' impact on markets but it will do nothing. Thats why they are doing it. They know it will be perceived as action, so they are covered, as 'they did all they can'. But think about it, who borrows money when an economy is contracting and asset prices are falling. No one - except banks who can't fund their short term liabilities because of a run on the banks. The Fed surely has deep pockets there since they can always print money, which just erodes the value of the money you have, so hidden increase in tax.