“The credit tightening that had been bothering the Fed over the past year was the increase in the Treasury-Eurodollar (TED) spread and the LIBOR-OIS (overnight index swap rate) spread. The first reflects a market shift from riskier to less risky assets and the second reflects a shift from intermediate maturity lending between banks (one to three months) to overnight lending. Then on September 18, the increasing demand for liquidity caused the T-bill rate to go temporarily negative, which is when Bernanke and Paulson hit the panic button. T-bill rates can only go negative so far before it pays to flee into base money.” (10/15/08)