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Consumer borrowing fell for the eighth straight month in September. This record-setting streak is due largely to tightening by lenders, unemployment and the conservative preference to pay down debt rather than spend. This widespread fit of fiscal responsibility, economists fret, could prevent a recovery from taking root, since consumer spending is responsible for 70% of the U.S. economy. This conventional thinking, of course, overlooks the fact that an eventual increase in spending that isn't fueled by consumer spending will yield a recovery that's more likely to last.

According to the Federal Reserve, borrowing fell at an annual rate of $14.8 billion in September -- it's biggest drop since July and much larger than the $10 billion predicted by economists. The behavior is exactly what you'd find in people worried about losing their jobs or focused on rebuilding safety funds and investment portfolios. Those who want to borrow are finding banks won't be complicit this time, as they clamp down on lending practices.

US Senator Bernie Sanders, independent from Vermont, is known for his straightforward and unbiased positions.

His new legislative proposal is to break up big banks that are deemed "too big to fail." To quote Mr. Sanders: "if an institution is too big to fail, it is too big to exist. We should break them up so they are no longer in a position to bring down our entire economy."

Is a Fed rate tightening up ahead any time soon? Despite concern that low, real, short-term interest rates are hurting the dollar. Don't count on it.

First, the U.S. Federal Reserve wants to encourage banks to lend -- for auto purchases, and especially for business loans -- and nothing prompts banks to lend, even in tighter capital times, like low-interest-rate or zero-interest-rate money.

The US dollar is down 20% since 2002 on a trade weighted basis. Other world economies like China are dynamic, with growth rates of 8 and 9%. With that kind of clout, countries like China, India and Brazil, can choose where to place their reserves.

Slowly, developing countries are shifting their reserves away from the dollar into the euro and yen. Neil Mellor, strategist at Bank of New York Mellon Corp (NYSE: BK), which has some $20 trillion dollars in assets under custody said: "I don't think there will be an imminent move, but it is quite clear there's a plan to shift reserves to a more balanced portfolio."

Barclays Capital Research reported that central banks placed 63% of new cash in non US currencies between April and July.

Wednesday, the Fed announced that interest rates would remain at zero to 0.25% for at least the next six months.

The Fed statement read as follows: "weak conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period." The only change in the Fed's policy was a tweak in the amount of corporate debt that the Fed intends to buy.

Ben Bernanke and the Federal Reserve have kept interest rates low for some time. Interest rates lie somewhere below a quarter point and a zero, giving people very little reason to save. Why should you save money when inflation could work against you and the money will not grow?

Low interest rates also work to reduce the cost of borrowing. This could help businesses that want to expand, or the federal government that has trillions of dollars of debt that it needs to finance.

U.S. stock futures drifted a little lower (later a little higher) Thursday morning following Wednesday's Federal Reserve's statement that it was keeping rates at record low levels. However, earnings from tech giant Cisco accompanied by an upbeat outlook could give a boost to tech. Also this morning, investors will watch as retail chain-stores report October sales.

[Update: Futures now point to a higher open following retail sales data, earnings and lower claims numbers.]

On Wednesday, Wall Street ended mixed and relatively flat after the Federal Reserve decided to keep rates steady. While conceding the economy has picked up, policymakers said this was not enough to hike interest rates, saying an increase will instead depend on when the labor market and inflation pickup. Given that there have been no inflationary pressures and that unemployment is expected to rise, the dollar weakened yesterday and short-term Treasury yields fell. The Fed also cautioned consumer spending would remain strained. Of course, the market would have liked to see a stronger show of confidence.

The Federal Reserve Open Market Committee (FOMC) issued its statement almost exactly as expected. The language on interest rates is remaining low for an extended period of time remained largely unchanged, and the decision was unanimous.

As I have mentioned earlier, the Fed continues to avoid any potential language which could disrupt the financial markets. Any potentially controversial ideas seem to be reserved for speeches by the Chairman and other government officials.

U.S. stock futures climbed on Wednesday morning, ahead of the decision by the Federal Reserve on interest-rate and monetary policy. This afternoon, the Fed will give its outlook on the economy and the corresponding policy it's taking. It is widely believed the Fed will not raise rates. Meanwhile, more earnings and economic data are on tap.

Unlike this morning, traders appeared more cautious Tuesday, as the Fed began its two-day policy meeting. Stocks ended mixed and fairly unchanged following news that Warren Buffett's Berkshire Hathaway (NYSE: BRK.B) has decided to buy Burlington Northern Santa Fe (NYSE: BNI) in a deal worth $44 billion and as Johnson & Johnson (NYSE: JNJ) announced a 6-7% workforce reduction.

One modest ray of light on the fiscal front for the United States: the U.S. Treasury, as expected, announced that total borrowing for the current quarter (October quarter) will be 43% lower, as a result of a reduction in money needed to help the U.S. Federal Reserve manage its balance sheet.

The Treasury said net borrowing will total $276 billion for October through December, compared to the previous estimate of $486 billion. The Treasury also projects a borrowing of $478 billion for the January-March quarter.

Against the backdrop of heightened public criticism, The U.S. Federal Reserve is trying to encourage banks to take the first step in controlling excessive pay and bonuses. Regulators have established broad guidelines for pay incentives and bonuses. However, they are quite loose and do not nail down any specifics. Regulators are trying to coax compliance before the end of the year.

Britain has taken the lead and mandated that a percentage of bankers' bonuses should be deferred for a number of years.

Why is there such a public outcry to curb excessive bankers' pay and bonuses?

If on Monday investors were ready to bounce back from Friday's selloff, today stock futures are sharply lower, indicating U.S. stock markets are poised to slump at the open ahead of the Federal Reserve two-day policy meeting that begins today. Another rate hike from Australia, poor results from UBS and weak European markets weigh on sentiment.

Monday was a volatile session. Stocks rallied in the morning following a surprise profit from Ford (NYSE: S) and an upbeat home sales reading, but mostly due to October's manufacturing index that jumped to its highest level in three and a-half years. That didn't hold up, though and the Dow skidded to negative territory only to bounce back later in the afternoon as buyers came back in.

What a week it was and it is starting off with more of the same! The day before Halloween the market gets spooked. The Dow drops 200 one day, rises 200 the next, and falls 250 to close the week. Yes, financial pundits could point to meaningful stories about the dollars rise, consumer spending sagging, the recession ending and so forth to explain market reactions but there is more to it than that.

Even among the 15 positions discussed in Where should granny put $50,000? only the Vanguard Total Bond Market exchange-traded fund (NYSE: BND) and the Kellogg Co (NYSE: K) were up last Friday. Good thing I advised "granny" to put half her funds in the ETF.

Wouldn't you like to be a fly on the wall when the Fed meets with bankers on pay review? You can bet that sparks will fly.

Monday is the day this happens. We already know that the bankers do not want the Fed meddling in their compensation policies. However, there is pressure from the public and Congress for a clamp down on excessive bank pay and bonuses, especially at the big banks.

We have a human disaster of enormous proportions. We have 15 million persons unemployed. Thousands are on the brink of losing their homes. As of this December, 1.7 million unemployed will exhaust their benefits. They may be homeless at this holiday time. Some 400,000 persons exhausted their benefits in the month of October.

Now, as reported in BusinessWeek, one lone economist, Katerina Alexandraki, is asking Wall Streeters to give their bonuses to the homeless and unemployed. She has set up a website, Bonus for Homes, and started a campaign to distribute the monies to low-income earners and the unemployed.