Is the Fed prolonging the problem?

Question

I understand (correct me if im wrong) that the Fed's job is overall to keep the economy going. However, can the Fed truly do anything to help a market that dwarfs the amount of capital they have? With the possibility of inflation spiraling out of control...is it time for the Fed to leave the market and let it be? Or are there still more Bear Stearns out there that could crush the economy?

Answer 1

Since the economy isn't stagnant, the Fed must react to conditions which happen as a matter of regular market/economic events.. Of course, once the Fed has reacted to economic conditions it must evaluate what effect their decisions had on the economy. Fighting inflation is certainly a key priority on the Fed's mind, however so is a slowing economy (recession).. The Fed lowers interest rates because the economy is slowing.. Hoping to kick start investment and spending through "easy & cheap money".. This also was intended to make money available for people who had mortgages at high rates and to help them refinance these mortgages at lower rates and avoid more foreclosures, .. Unfortunately, the effect is now very low interest rates, a lot of money in the economy and a weaker dollar.. This is leading to inflation and it has the Fed talking about raising rates..(Probably, at the expense of slowing the economy again).. A balancing act for the Fed..

Bottom line, the fed can never leave the market be, its job is to keep the economy growing and adjusting the arsenal of tools it has to meet its objectives in an ever changing economic environment.. How much capital the Government has available is irrevelent since that amount is unlimited.. Its   the amount of currency available in curculation, how easy it is and the cost to get to this capital that the Fed uses as a tool to control economic conditions..There probably are other Bear Sterns out there, but hopefully the tides are turning for a better economic cycle..Changing markets over time is what will pull this country from a recession.. Well that, and Bush out of office..

Answer 2

The Federal Reserve IS the problem. They created this problem in the first place. Their job is not to keep the economy going. Thier job is to impose the hidden tax called inflation on us. Capitol? They have all the capitol they ever want to print. Between the Federal Reserve and the local and national banks creating money out of thin air, they are inflating the heck out of us. Bear Sterns is only the beginning. We have seen this in our history many times before. I strongly suggest that you get and read The Creature From Jekyll Island - A Second Look At The Federal Reserve by G. Edward Griffin. http://www.realityzone.com/crfrjeiss.htm...  This is a really informative book. I was able to turn to any page in this book and find something interesting on every page. It explains the entire history of world banking from the beginning of the first fiat currency and the first speculative bubble based on Tulips (you know the flower). The Federal Reserve is set up to crush the economy and once you learn how and why it was created you will understand. Also another book to read is called The Forgotten Man - A New History Of The Great Depression by Amity Shlaes http://www.amazon.com/Forgotten-Man-Hist...

Antother book to read is The Exchange Artist - A Tale of High-Flying Speculation and America's First Banking Collapse by Jane Kamensky http://www.amazon.com/Exchange-Artist-Hi...

These 3 books will explain the history you must have to understand what is happening and where we are headed.