As a lead up to the current credit crisis, the Federal Reserve has been the banking industry's bag of salt and vinegar chips.
Business Week is one of the few that has talked about it, as recently as March of this year.
One measure of the size of monetary stimulus is the expansion of M3, a broad measure of the money supply that includes institutional money funds. Capital Economics calculates that M3 is up 15% from a year ago, the biggest increase in 37 years.All I've heard recently, however, is about the greedy banks who offered subprime salt and vinegar chips to unsuspecting mortgagees. It's much more important to figure out where the banks got the chips from in the first place.
Imagine that banks suddenly have 15% more money (just in the year 2008) to lend out. What are they going to do? They're going to eat the chips. Notably, Business Week doesn't even talk about how many bags of chips the Fed put in front of the banks in the last several years before 2008 (although they were worried about too much M2 and M3 back in 1997).
The Federal Reserve was the architect not only of the 1929 stock market crash, but also the prolonged depression of the 1930's. Their actions recently, at least so far, are eerily similar to what they did 80 years ago. Will the result be any different? Ha! It would be nice if we could vote these rascals out of office, but we can't because they're a private corporation.
Is the Fed really worth it? No. They are the prime cause of this crisis, yet they're fully content to let the bankers take all the blame.
This article was also published on SimpleUtahMormonPolitics.com