bailouts for everyone!!!

the fed is so stupid that they don't realize that they are now powerless to affect the economy. first, it is not a failure to print money that makes the money supply measures contract in hard times. it is the lack of interest in borrowing money that dries up money. when a loan is paid back, bank deposits are drawn down to do it. that by itself reduces the money supply. if the entity doesn't reborrow the money, the money supply has no choice but to go down. which brings up the second point. now that the fed has eliminated reserves at all banks, it has no mechanism to make money more available other than to run interest rates to zero which will do no good when the economy is levered to the eyeballs. the banks must go out and borrow money to make loans. period. and if investment dollars are disappearing due to bad investments, there will be fewer of those. this is all rather comical to see grown men and women thrash around pointlessly and for the public to be so dumb. my new mantra: bailouts for everyone. it will at least accelerate the demise and reconstruction of the economy.

it's good to see that someone else out there understands the fractional reserve system. the multiplier effect works both ways ! and when debt overloads the system and finally breaks the camel's back, then all that can happen is what you describe.

Edited by humble1, 28 March 2008 - 01:26 PM.

the fed is so stupid that they don't realize that they are now powerless to affect the economy.

first, it is not a failure to print money that makes the money supply measures contract in hard times. it is the lack of interest in borrowing money that dries up money. when a loan is paid back, bank deposits are drawn down to do it. that by itself reduces the money supply. if the entity doesn't reborrow the money, the money supply has no choice but to go down.

which brings up the second point. now that the fed has eliminated reserves at all banks, it has no mechanism to make money more available other than to run interest rates to zero which will do no good when the economy is levered to the eyeballs. the banks must go out and borrow money to make loans. period. and if investment dollars are disappearing due to bad investments, there will be fewer of those.

this is all rather comical to see grown men and women thrash around pointlessly and for the public to be so dumb.

my new mantra: bailouts for everyone. it will at least accelerate the demise and reconstruction of the economy.

i've given up the public.....collectively they are idiots. and there are plenty of very smart people who "still believe" just like they did back in 2000.

ed rader

Edited by ed rader, 28 March 2008 - 02:56 PM.