October 18, 2008 at 22:43:28

Greed and Potato Chips: The Fed's Role in the Current Credit Crisis

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By Frank Staheli (about the author) Page 1 of 1 page(s)

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For OpEdNews: Frank Staheli - Writer

There is no doubt that a lot of greed is going on in America. Most people's greed rises or falls in relation to what is available to them. To illustrate this concept, let me use a food example. Assuming that I love salt and vinegar potato chips (I do), when am I the most greedy--when they're put away on the shelf, or when they're sitting in front of me?

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

SimpleUtahMormonPolitics.com

Frank returned in 2006 from military service in Iraq. He is a Utahn, and a member of the Church of Jesus Christ of latter-day Saints. His personal weblog is called Simple Utah Mormon Politics. He is a computer programmer/designer. he and his wife (more...)

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