To do this they have chosen nine firms out of 100 that applied for the program. The guts of the program are that the government will partner with private companies to buy toxic assets.The Treasury supposedly did background checks to be sure that none of the firms chosen had any "conflicts of interest."

The Federal Reserve Open Market Committee (FOMC) issued its unanimous decision. The language on interest rates and quantitative easing remained unchanged. It indicated that inflation is not a problem despite a recent rise in oil prices and sees economic stabilization although continued weakness.

This decision was designed to avoid potential landmines which could disrupt the financial markets. In other words, the FOMC wanted this statement to be a non-event and seems to have largely succeeded.

Have you looked at a chart of the 30-year bond lately? What you see may be a bit disconcerting. In the past few weeks the June contract has fallen from a high of about 143 to a low of 115 or $28,000 (each 100 point equals $1000.00.) Remember when the Federal Reserve announced that it would buy US treasuries and it was anticipated that the bonds would rally? Well as you can see, this did not happen.

US treasuries have been selling off because investors see a mountain of debt that needs financing, and the effect of this process is putting downward pressure on treasuries, with yields rising. (Prices and yields move in inverse directions. As the price goes down, the yield goes up.)

Since the hyper inflation of the 1970's the Federal Reserve has been plagued with fighting inflation, the number one bad guy of the economy. Now we are in a deflationary cycle and the Fed is using all the tricks in its bag to end this decline and turn the economy around.

One theory being thrown about is that if you create inflation, deflation will go away. Now, this is the wildest proposal to come out of the mouths of economists. Gregory Mankiv and Kenneth Rogoff are advocating 6% inflation for at least a couple of years.

The Federal Reserve Open Market Committee (FOMC) issued its decision on interest rates. The market anxiously awaited the decision to determine if there would be any surprises like the previous decision in which the Fed announced a massive quantitative easing program.

This decision was quite different and can be summed up in two words: no change. There was virtually no change from the previous statement aside from an acknowledgment of recent economic news. In other words, it turned out to be a non-event.

Bloomberg reported yesterday on the progress of a Fed task force reviewing how to improve regulators' response to bank distresss in the the future. It said the evaluation focuses on "speeding information flows and clearing up lines of communication." And they expect us to think they're serious? Where's mention of "ending the underground banking system."

The first thing we should be hearing out of our banking top cops is a call for a law forcing banks to put all of their transactions on the books instead of being allowing to shuffle liabilities around through the Enron-esque investment and accounting practices allowed today. Take JP Morgan Chase & Company (NYSE JPM) as an example. At last count, Jamie Dimon's fiefdom had $87.7 trillion of credit default swaps ... somewhere. Bank of America Corp (NYSE BAC) and Citigroup Inc (NYSE C) have another 43.3 trillion of CDS's. Goodness knows how many CDO's and collateralized loan obligations other banks have.

The amendment calls on the Fed to identify each firm it has given assistance to, how much the assistance was worth and what the firm is doing with the money. It is important to note that the amendment passed by a vote of 59 to 39. In other words over half the Senate is leaning on the Fed for more information about what they are doing.

The Federal Reserve has been buying U.S. Treasury bonds and notes. The 16 primary dealers who work with the Fed are selling these bonds and notes to the Fed. In turn the Fed credits their balance sheets so they have more money to lend and therefore interest rates should drop.