Is the FOMCs efforts to shore up the banking system just creating a slow motion train wreck?
Posted on August 29th, 2009 by admin
Banking
The Federal Reserve has pumped nearly a $1 trillion into the banking system since September, yet the economy continues to slide due to lack of liquidity.
Will the Fed’s action turn the situation around or just prolong the agony.
The Federal Reserve has pumped nearly a $1 trillion into the banking system since September, yet the economy continues to slide due to lack of liquidity.
Will the Fed’s action turn the situation around or just prolong the agony.
Filed under: Politics
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Blockhead, I think we agree on these things. I believe they are actually making things worse with the amount of intervention they’ve put in the economy. If they hadn’t done anything it would be no worse today and the dollar would be stronger reducing gas prices.
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Without a doubt, it is delaying the inevitable. Let the self created bubble burst and let the chips fall where they may.
(You’ll have to excuse Acyberwin. He has trouble reading.)
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Well, in the early 30′s when this came up… The decision was to just let insolvent banks die… It was thought that it was the only way to purge all the bad debt from the system… That lead to the collapse of the banking system nation wide.
So, I don’t know! Maybe it is a case of damned if you do, damned if you don’t!
EDIT : I think I almost agree with justagirl, except for the part about all the jobs that would be lost, and all of the people that will become homeless! Although, there is a part of me that thinks it may be the only way!
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I agree they may be causing more problems down the road (that is always what happens when the fed tries to starve off a slow down or overheating) but I dont believe its a liquidity problem per say; the problem is on the demand side and its almost impossible for any government entity to affect demand to any significant degree. both Dems and Reps get to involved with things they have no business getting involved with.
logistically how can a big group of lawyers know whats best for an economy that is comprised of very savy businessman that want to make money. the market always corrects and adjusts to grow the economy and more times than not both congress and the FED by pressures from congress exacerbate the issues.