why would not the federal reserve allow a recession? Alot of foreign economies are overheating like china. Our inflation costs such as fuel and food are out of hand. A good old recession will clean excesses out of the markets and the economies. If they now lower interest rates the dollar will collapse further. If they now raise interest rates the economy will collapse to fast. They can allow the markets to correct and wipe out billions of dollars and other currency and asset values world wide to take care of the liquidity excess. Then they can then lower interest rates and pump money into the economy after excess liquidity is destroyed without them having to raise or lower interest rates now.
why wouldn't federal reserve allow a recession?
Started by
cobb
, Jul 27 2007 06:56 PM
5 replies to this topic
#2
arbman
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Posted 27 July 2007 - 07:09 PM
... because of the credit risk...
So, they are not allowing it, they just can't do anything about it...
The same answer to why the technicals are not working that used to spot the major bottoms probably, because there is no new money...
BTW, a historical perspective...
The current credit risk dwarfs the 2005 top by a 50-100 bps and that was the bottom in 2005, this market has just started really dumping only a week ago...
Given how quickly the internals became oversold, it kind of tells us the market was surely running on empty, how come the market dumps only 5% and you get a record number of new lows...
- kisa
So, they are not allowing it, they just can't do anything about it...
The same answer to why the technicals are not working that used to spot the major bottoms probably, because there is no new money...
BTW, a historical perspective...
The current credit risk dwarfs the 2005 top by a 50-100 bps and that was the bottom in 2005, this market has just started really dumping only a week ago...
Given how quickly the internals became oversold, it kind of tells us the market was surely running on empty, how come the market dumps only 5% and you get a record number of new lows...
- kisa
Edited by kisacik, 27 July 2007 - 07:16 PM.
#3
arbman
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Posted 27 July 2007 - 07:20 PM
I am not opposed to your opinion, I share the same opinion...
#4
Russ
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Posted 27 July 2007 - 08:26 PM
Government cannot control whether there is a recession, these are natural economic cycles, when an economy works hard on all 8 cylinders it must then rest for awhile.
"Nulla tenaci invia est via" - Latin for "For the tenacious, no road is impossible".
"In order to master the markets, you must first master yourself" ... JP Morgan
"Most people lose money because they cannot admit they are wrong"... Martin Armstrong
http://marketvisions.blogspot.com/
"In order to master the markets, you must first master yourself" ... JP Morgan
"Most people lose money because they cannot admit they are wrong"... Martin Armstrong
http://marketvisions.blogspot.com/
#5
humble1
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Posted 28 July 2007 - 06:45 PM
this is a good time to remember that the fed was created in 1913 for the purpose of smoothing out, or eliminating, the boom/bust cycle. shortly afterward, we had the greatest depression in american history.
the point is obvious: the fed cannot disallow a recession. the myth that it stood aside during the 1930's is hard to disperse. i'm too lazy to type about all of that which most of you know anyway. i wish someone here would do it, lol. use a new thread and title, please. i think it would open a lot of eyes.
the fool greenspan created the greatest bubble EVER as head of the fed. now we must have the greatest bust EVER.
Edited by humble1, 28 July 2007 - 06:46 PM.
#6
spielchekr
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Posted 28 July 2007 - 07:17 PM
Why wouldn't the fed prefer a crash to a recession? The bull market could then simply continue, just at much lower prices.
