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U.S. Budget Deficit
August 10, 2007

Is the Fed prepared to drop cash from a helicopter?

Deficits Debt

"Fed Pumps 35 Bln Dlrs Into US banking System, Ready To Do More

The Federal Reserve pumped a total 35 billion dollars into the US banking system Friday and said it was ready to inject more money if necessary amid sharp downtowns on US and global stock markets.

The Fed injected an initial tranche of 19 billion dollars, followed rapidly by a second hefty infusion of 16 billion dollars, into the financial system in a bid to calm widespread market turmoil.

"The Federal Reserve is providing liquidity to facilitate the orderly functioning of financial markets," the US central bank said in a rare statement.

It said it would also "provide reserves as necessary through open market operations" to keep its short-term federal funds interest rate close to its 5.25 percent target and to boost liquidity in America's vast banking system.

The central bank acted amid fears on Wall Street that a widening credit crunch could stoke interest rates on bank loans and slow US economic growth."

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