This is a Cato special podcast. I'm Caleb Brown in an attempt to stem a possible

recession. The Federal Reserve has cut deeply. The Federal Funds rate and has hinted that another rate cut is in

the often.

But in attempting to stave off this recession, might the Fed be setting the stage for another

bubble down the line.

Cato Institute Chairman William Niskanen discusses the Fed's recent moves.

Well, there have been two actions.

One is that the Federal Reserve has reduced the Fed funds rate by

three quarters of one percentage point, 75 basis point. It did that a week before

the typical meeting of the Federal Open Market Committee,

and the 75 basis point reduction was larger than almost anybody expected.

Most people were expecting in a 50 basis point

reduction. The other thing is that both the administration and members of

Congress have been coming up with a stimulus package, basically a fiscal policy approach and a lot of rebates and direct

credits to people.

If this rate cut was so much larger than what most people expected,

what do you suspect was driving that decision? What data were they looking at closely?

Well, it's not clear because I think that we, the public sees most of the data that are

available to the Fed. I think they may be trying to head off what may be

what would be a mischievous, unproductive activity by the administration in the Congress.

From the Wall Street Journal today's economy shows some signs that are common to most

recessions, stock prices falling, long-term interest rates dropping below the

...