Feb

20

The University Club in DCAmazingly, since the beginning of the Fed 100 years ago, there have been very few reversals in direction of the discount rate. About 25 in the last 100 years. The average run of changes in the same direction is about six. A nice chart of this appears on page 249 of Ed Spec. Thus, the expected life expectancy of the discount rate increases in store is about three percentage points above here with six forthcoming likely. Doubtless we will be greeted with the usual "once is enough," even if the stock market goes down or the long term rate does not decrease.

In the old days the discount rate was always increased during the day with a decline preceding it, whereas now, it seems to be always coming propitiously after a nice run of strength like the five in a row rises of today, or of course before an auction so as not to discommode the past, present or futures. Must tip the hat however to the privity of the current increase which occurred only after the fifth strong close in a row, on the fifth consecutive day. No squash was apparently played at The University Club or the private courts in Congress.


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