Oh so it's the Fed that is debasing the US$? And here was me thinking it had something to do with:

1. perpetual trillion dollar plus budget deficits,
2. a trading account deficit that is ??? Who knows now, any number above US$X trillion,
3. every US citizen racking up credit to the tune of 170% of what they earn and hoping like hell that Asian and Middle East savers keep on lending them US$80bn a year even if they do default,
4. parochial US politicians who don’t like being beholden to “foreigners” – in a global economy,
5. 70% plus of the US economy is directly connected to item 3 above,
6. a whole bunch of US banks that have not declared their liabilities so as to get under their fiduciary requirements or even their own Tier 1 ratios and
7. the fact that The Plan appears to be to buy in more green ink to print more dollars to get rid of the red ink.

I wonder whether we are not living through the bloody demise of the $US as a totemic currency as everyone not living cloud cuckoo land starts to worry about just what is the backing for the US$?

dhome, sydney, australia

Actually, it was a purly political move. You have to realize that in America it is the silly season. The Presidential elections are all about who can promise more. Now, both parties are trying to out-promise each other to win votes. This rate cut is an over reaction in an attempt to pander to voters. Rate should be left alone, and the economy should be given a chance to shake out the losers. (painful as that might be) Think of the flip side. What will happen when rates begin to rise again?

pappy, Huntsville, Alabama

The timing of any policy change is very critical. The issue of haste does not arise because the same critics would turn round to ask why he did not act fast[another word for haste]. My thinking is that rate changes affect the economy with a lag. That being the case and given that the Fed has more facts than those of us on the outside, i do not think it is right or even fair to accuse the Fed of hastiness. We all are intersted in the speedy recovery of the US economy.

Emmanuel Moore ABOLO, lagos, nigeria

The sky is falling!! The sky is falling!!

You wish.

The US Economy is resilient and flexible. The US ecomomy is not in a recession. The financial markets need to wring out their bad investments, which MAY force a slowdown in economic growth for a brief period.

If the US economy goes into recession or into the more likely slowdown, it will allow the economy to reduce unproductive investments and activity, trim the fat, improve customer service, reallocate resources to more productive activity, clear out inventory, hold prices in check, reorder credit risks, etc, etc. etc.

Then, as ALWAYS the US economy will roar back while supporting the rest of the world.

Relax, there are pros and cons to everything, and a cycle for every course of action.

In the meantime, we are all going to eat well, buy what we need and most of what we want, watch TV, travel, enjoy life and live well.

Enough with the gloom and doom.

Mike, Indiana, USA

A 0.5 % cut would have been justified.. but .75 in one go & befor the monthly meet of the fed !Really does smack of desperation !!!...The Bottom line is the U.S is in Recession now & the u.k is almost certain to follow in the spring.. But Economists wont say that for fear it becomes a self fulfilling prophesy !

Andy cooper, Redditch,

Most debtors these days are living on borrowed time.
The pigeons will come home to roost one day.
By reducing base rate will mean feeding the spend now and pay whenever brigade.
It has been proved in te past that you can not spend your way out of debt.
This was proved by Barber in the early Heath Government.
Do we ever learn ?

Bernard Parke, Guildford, England

1929 here we come :(

keegan, portland , oregon

The real issue isn't base rates but the disparity between Interbank rates and national liquidity reserves (currently 2.4% pro rata in the US, historical average around 6%). The tipping point of 2% is only about a week away.

Tim O'Sleen, Durban, SA

Ron Paul is an agent of the establishment who is being used as a talking point. He's unelectable and that's exactly why he's allowed to speak.

With regards to global markets, the entire world looks to the U.S. for leadership in times of crisis. America isn't even in recession yet but the hint of recession was enough to spark a global sell-off. If the FED did not act today, the damage done to markets around the world would have been much more extensive.

I would watch for coordinated rate cuts across Europe and Asia after the FED has made the prelimary move. Despite the recent talk of markets decoupling from the U.S., this week proved that the USA is still very much the trend setter as well as the most important market on the planet upon which all other markets are hinged.

Jack Mayhoffer, New York,

Fed rate 3.5% - inflation, rising, now at say 2.9%. Real interest rates, O.6%. There is no longer any room for the Fed to influence the market through interest rate cuts. Certain classes of assets continue to fall, banks widen margins to restore capital. We have stagflation and a decade of gloom.

alan morgan, merifons, France

And all the king's horses, and all the king's men ...

Charles Pluckhahn, Seattle, USA

Before the rate cut there were no buyers for equities, It was a perfect storm as a dozen factors from risk assumptions to earnings forecasts caused a massive markdown. The last plank of optimism had been removed with the collapse of the emerging market 'safe havens'. If they had not taken some significant measure of action, there may well have been the first 1000 point down day for the Dow. Of course, that could still happen; you never know with a house of cards

Phil, Bishop's Stortford,

Yes, I rather agree with what you say.

I do have an additional point: I suggest that the Fed's remarkable move yesterday was not done out of panic (as you say) but out of a desire to shock, in response to the rtising panic in the markets.

And shock it did.

I believe the size and timing of this rate cut was intended to impress upon the Markets that the Fed was indeed taking the problem seriously, and would go to extraordinary lengths to try to avert the threat of a recession. (I believe that, unfortunately, the Fed's strategy doesn't offer much chance of achieving that.)

Without that shock, I suspect the NY Stock Market was in imminent danger, Tuesday morning, of spiralling down with no obvious stopping points.

And it had to be a shock move because, after this, there are not many arrows left in Bernanke's quiver.

DogmaLite, Keninghall, Norfolk UK

Ron Paul is the only salvation for the U.S. He has the FED and Bernanke pegged for the antics that institution has been using to create asset bubbles and to debase the U.S. dollar.Take a look at YOU TUBE to see the evidence of Congressman Paul blasting Bernanke for his institution's follies and Ben sitting there with a smerk on his face, while failing to address the FED's antics and shortcomings. SAD, and don't think the current debacle is a storm in a tea cup. This disaster has got legs to it and we haven't even finished Act I!!!!!!

Pauli, London,