The Phaserl


Federal Reserve Economic Stimulus Plan Goes Negative!

from The Burning Platform:

Reserve economic stimulus plan is edging toward the Twilight Zone now that the Fed sees its recovery about to be eaten by an economic apocalypse greater than its imagination could conceive. Though many think of central bankers as stogy and uncreative, the Fed has been quite creative when it comes to massive economic ideas that don’t work or are extremely repressive to normal market functioning.

Take for example this one:

Federal Reserve Economic Stimulus Plan I

I would summarize all of the Federal Reserve’s past economic stimulus plans as follows:

The best way to solve a housing market crisis that comes from too many bad loans that were made due to lax credit terms is to keep credit terms fairly loose, make sure housing prices stay inflated to where no one can afford a house without those loose terms, lower interest rates down to zero, and then give banks trillions of free dollars to loan to people who are already up to their ear holes in debt, but allow the banks, if they wish, to invest that money in stocks, instead. (This is the plan I formerly called “Goliath.” Shove the debt accelerator all the way through the floor while steering hard toward the bank vault.)

Somehow, Ben Burn-the-banky and his Fed friends imagined that would work. Nobody knows why, but you can only blame them for trying. All they got was a pile-up of money in the bank vaults.

Federal Reserve Economic Stimulus Plan II

Unfortunately for the Federal Reserve, Economic Stimulus Plan I failed because no citizens wanted the extra debt, given that they were already drowning in debt. They couldn’t hear the Fed’s enticements to spend because the debt was over their ears. So, the board members of the Federal Reserve looked around and said, “What else can we do?”

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