The February issue of Crane Data's flagship Money Fund Intelligence is scheduled to be e-mailed to subscribers this morning, along with our performance and rankings for the month ended Jan. 31, 2012. The latest edition of MFI features articles titled, "Changes Continue, Still More Cosmetic than Consolidation," which reviews recent changes and liquidations among money funds; "MMFs Going to Be Fine Says JPM's Bob Deutsch," which interviews J.P. Morgan Asset Management's Managing Director & Head of Global Liquidity; and "Heavy Hitters Comment on Pending Regulations," which excerpts from recent comments by regulators and CEOs. Crane Data will also be sending out its latest Money Fund Intelligence XLS monthly spreadsheet and rankings shortly, and we've updated our Money Fund Wisdom database with 1/31/12 data. (Note: We also quote from today's front page Wall Street Journal story on money funds, "U.S. Sets Money-Market Plan". See our 'Link of the Day' at right.)
In other news, Charles Schwab wrote an editorial to the Wall Street Journal yesterday entitled, "The Fed Votes No Confidence", and subtitled, "The prolonged -- 'emergency' -- near-zero interest rate policy is harming the economy." Schwab commented, "We're now in the 37th month of central government manipulation of the free-market system through the Federal Reserve's near-zero interest rate policy. Is it working? Business and consumer loan demand remains modest in part because there's no hurry to borrow at today's super-low rates when the Fed says rates will stay low for years to come. Why take the risk of borrowing today when low-cost money will be there tomorrow? Federal Reserve Chairman Ben Bernanke told lawmakers last week that fiscal policy should first "do no harm." The same can be said of monetary policy. The Fed's prolonged, "emergency" near-zero interest rate policy is now harming our economy."
He explained, "Average American savers and investors in or near retirement are being forced by the Fed's zero-rate policy to take greater investment risks. To get even modest interest or earnings on their savings, they move out of safer assets such as money markets, short-term bonds or CDs and into riskier assets such as stocks. Either that or they tie up their assets in longer-term bonds that will backfire on them if inflation returns. They're also dramatically scaling back their consumer spending and living more modestly, thus taking money out of the economy that would otherwise support growth."
Schwab commented, "In short, the Fed's actions, rather than helping, are having the perverse effect of destroying the confidence of businesses and individuals to invest and the willingness of banks to loan to anyone but those whose credit is so strong they don't need loans. The Fed's Jan. 25 statement that it would keep short-term interest rates near zero until at least late 2014 is sending a signal of crisis, not confidence. To any potential borrower, the Fed's policy is saying, in effect, the economy is still in critical condition, if not on its deathbed. You can't keep a patient on life support and expect people to believe he's gotten better."
