The Plebian

Pretty Economic Pictures for the Illiterate Masses

Fighting Water with Water: The Federal Reserve

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 It is amazing at times how willing those that have benefited from a flawed system are willing to prop it up with the very measures that got them into trouble in the first place.  Such is the current policies of the Federal Reserve and other influential actors affecting monetary decisions. 

In response to the debt bubble, the actions of the Fed is to pump out even more liquidty, the very same policies that originally inflated the housing and debt bubbles.  It’s like throwing water on a person drowning.  Even if these moves could contribute to stabilizing the economy, which they cannot, they would still only be addressing the symtoms of the disease and not the disease itself.

Mish at Global Economic Analysis offers alot of updated insight into similiar concerns:

“Time and time again Krugman, Mankiw, and others, even Ritzholtz fail to take the problem back to its root cause:  Government Regulation, Fractional Reserve Lending and the Fed.”

A great informative video is availible by googling ‘money as debt’.  Do yourself a favor this holiday season an educate yourself about how the monetary system operates.  It will suprise you and help put what is currently occuring in the financial world into perspective.


Written by eastwood24

December 22, 2008 at 9:02 pm

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