Thursday, March 26, 2009

Fed Running Out of Ammo

"The Fed’s decision to purchase $300 billion of long-term treasury bonds is indicative of two things: 1) The U.S. government has lost all sense of value relative to its currency, and 2) The U.S. Federal Reserve is getting desperate and is running out of options.

Far from giving the economy any kind of boost, these tactics are essentially more of the same, which has already proven futile in terms of getting the economy moving again. Major financial institutions are not lending or borrowing much more than they were when the crisis began, and all the Fed is doing is undermining what little value is left in the U.S. Dollar."

Midas Letter - Fed Running Out of Ammo

They are telling us the main purpose of the bailout to free up the credit market. This makes us feel like the bailout is ultimately for us. This is a lie. Lack of credit isn't the problem, the problem is that there is simply too much debt and leverage. Those who took on too much risk and too much debt need to suffer their consequences. Isn't that natural, just, and logical? Why should those of us who were prudent pay for their foolishness?

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