Fed Makes Same Mistake As It Did In 1927
The Federal Reserve yielded to international pressure, making the very same mistake that it made during 1927. Back then, there was a secret meeting and the Fed agreed to lower US rates to try to help Europe and thereby deflect capital inflows back to Europe. The exact opposite unfolded in the aftermath and even more money abandoned Europe and flowed directly into the US share market.
In 1927, the Fed lowered US rates to try to help Europe, which was then in the middle of an economic debt crisis the same as today. It is very curious how history repeats and we have just witnessed the Fed yield to international pressure once again.
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Now we have long bonds as collateral for derivatives. There were derivatives of a sort in the Great Depression but collateral was more likely a commodity or gold. With long bonds in big demand, the long end of the curve is flat, and banks won't lend as much with no chance of a better interest rate.